Bledsoe Company acquired $18,000 cash by issuing common stock on January 1, Year 1. During Year 1, Bledsoe earned $8,800 of revenue on account. The company collected $6,600 cash from customers in partial settlement of its accounts receivable and paid $5,700 cash for operating expenses. Based on this information alone, what was the impact on total assets during Year 1?
A)Total assets increased by $27,700.
B)Total assets increased by $900.
C)Total assets increased by $21,100.
D)Total assets did not change.

Question

Quizplus · Accepted Answer

The impact on total assets during Year 1 can be calculated as follows:

Beginning cash balance = $18,000 
Addition of revenues earned = $8,800 
Less: Cash collected from customers = -$6,600 
Less: Cash paid for operating expenses = -$5,700

Ending cash balance = $14,500

Since the only transaction that occurred during the year was the issuance of common stock for $18,000, the impact on total assets is the same as the ending cash balance of $14,500, plus the original $18,000 cash balance, for a total of $32,500.

Therefore, total assets increased by $21,100 ($32,500 - $18,000).

Bledsoe Company Acquired $18,000 Cash by Issuing Common Stock on January