Park & Company was recently formed with a $5,000 investment in the company by stockholders. The company then borrowed $2,000 from a local bank, purchased $1,000 of supplies on account, and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance. Based on these
Transactions, the company's total assets are:

Question

Quizplus · Accepted Answer

The total assets are calculated as follows: Initial investment of $5,000 + borrowed $2,000 + $1,000 supplies on account + $5,000 equipment = $13,000. However, $2,000 was paid in cash for the equipment, reducing cash assets, so total assets are $11,000.

Park & Company Was Recently Formed with a $5,000 Investment