Part A: X Company\'s accountant made adjusting entries at the end of the period

ID: 2502161 • Letter: P

Question

Part A:

X Company's accountant made adjusting entries at the end of the period for the following reasons:

$1,702 of unpaid interest on a bank loan,

$548 of wages that were earned by employees but not paid, and

$1,680 of insurance that expired.

As a result of these entries, total equities decreased by.....?

Part B:

After X Company's first year of operation, the following financial statement information is available:

What were total expenses for the year?

Balance Sheet Total assets $14,954 Total liabilities 7,080 Total Paid-In Capital 4,297 Income Statement Total revenue 21,936

Part A

Total equities will be decreased as retained earnings will be decreased. Reduction in total equities is $ 3930.

Calculation

Unpaid intrest on bank loan + wages that were earned by employees but not paid + insurance that expired

= 1702+548+1680

= 3930

Part B

Shareholders equity. = total assets - total liabilities

= 14954 - 7080

= 7874

Shareholder equity = total paid in capital + retained earnings

7874 = 4297 + retained earnings

Retained earnings = 7874 - 4297

=3577

Retained earnings = net income - total expenses

3577 = 21936 - total expenses

Total expenses = 18359