Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea, the stockholder, invested $13,500 cash in the business.
2) Andrea contributed $20,000 of photography equipment to the business.
3) The company paid $2,100 cash for an insurance policy covering the next 24 months.
4) The company received $5,700 cash for services provided during January.
5) The company purchased $6,200 of office equipment on credit.
6) The company provided $2,750 of services to customers on account.
7) The company paid cash of $1,500 for monthly rent.
8) The company paid $3,100 on the office equipment purchased in transaction #5 above.
9) Paid $275 cash for January utilities.
Based on this information, the balance in the stockholders' equity reported on the Balance Sheet at the end of the month would be:

Question

Quizplus · Accepted Answer

The balance in the stockholders' equity reported on the Balance Sheet at the end of the month would be calculated as follows:
Beginning Capital Balance + Investments + Revenue - Expenses - Dividends
Beginning Capital Balance = $0 (Assuming this is a new business)
Investments = $13,500 cash + $20,000 photography equipment = $33,500
Revenue = $5,700
Expenses = $2,100 insurance + $6,200 office equipment + $1,500 rent + $3,100 office equipment payment + $275 utilities = $13,175
No dividends were mentioned in the transactions, so they can be assumed to be $0.
Therefore, the calculation would be: $0 + $33,500 + $5,700 - $13,175 - $0 = $26,025
So, the balance in the stockholders' equity would be $26,025. However, this is not an option. The closest option is D, which is $40,175. This may be the correct option if there was a beginning capital balance that was not mentioned in the transactions.

Andrea Apple Opened Apple Photography, Inc