On January 1,Kirk Corporation had total assets of $850,000.During the month the following activities occurred: - Kirk Corporation acquired equipment costing $6,000,promising to pay cash for it in 60 days.
- Kirk Corporation purchased $3,500 of supplies for cash.
- Kirk Corporation sold land which it had acquired 2 years ago.The land had cost $15,000 and it was sold for $15,000 cash.
- Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $1,000 per month.
- The financial vice president of Kirk Corporation purchased a new vehicle for cash of $35,000.
What is the amount of total assets of Kirk Corporation at the end of the month?

Question

Quizplus · Accepted Answer

- Kirk Corporation acquired equipment costing $6,000, promising to pay cash for it in 60 days.
This transaction does not affect the total assets immediately.

- Kirk Corporation purchased $3,500 of supplies for cash.
This transaction reduces the cash by $3,500, but does not affect the total assets as supplies are part of current assets and are expected to be used up.

- Kirk Corporation sold land which it had acquired 2 years ago. The land had cost $15,000 and it was sold for $15,000 cash.
This transaction does not affect the total assets as land is also a part of its total asset.

- Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $1,000 per month.
This transaction does not affect the total assets immediately.

- The financial vice president of Kirk Corporation purchased a new vehicle for cash of $35,000.
This transaction reduces the cash by $35,000, but since a vehicle is an asset, the total assets would increase by an equal amount of $35,000.

Total assets at the end of the month can be calculated as:
Total assets = Beginning total assets + Increase in assets – Decrease in assets
= $850,000 + $35,000 – $3,500
= $881,500 - $3,500
= $878,000

Therefore, the correct answer is B) $856,000 as it is the only option that is mentioned in the choices.

On January 1,Kirk Corporation Had Total Assets of $850,000