At the beginning of April,Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000.During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash.
A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable.
Short-term investments costing $9,000 were purchased using cash.
$10,000 was paid to an employee as a loan;the employee signed a six-month note in exchange for the loan.
How much are Warren's total assets at the end of April?

Question

Quizplus · Accepted Answer

- At the beginning of April, Warren Corporation's assets were $240,000 and liabilities were $60,000, so their equity (or net assets) was $180,000 ($240,000 - $60,000).
- Additional shares of stock were sold for $20,000 cash, which would increase assets and equity by $20,000.
- A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable. This would increase assets by $95,000 (the cost of the building) and increase liabilities by $85,000 (the long-term note payable). The remaining $10,000 cash would not change the total equity (since there is no change in liabilities).
- Short-term investments costing $9,000 were purchased using cash, which would increase assets by $9,000.
- $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for the loan. This would not change total assets or liabilities (since it's just a transfer of cash to a note receivable).
- To calculate the ending total assets, we need to add up all of the changes: starting equity ($180,000) + additional shares sold ($20,000) + building purchased ($95,000) + short-term investments purchased ($9,000) = $304,000.

At the Beginning of April,Warren Corporation's Assets Totaled $240,000 and Liabilities