{"id":181199,"date":"2025-01-09T19:49:07","date_gmt":"2025-01-09T19:49:07","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=181199"},"modified":"2025-01-09T19:49:10","modified_gmt":"2025-01-09T19:49:10","slug":"andrea-apple-opened-apple-photography-inc-on-january-1-of-the-current-year","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/09\/andrea-apple-opened-apple-photography-inc-on-january-1-of-the-current-year\/","title":{"rendered":"Andrea Apple opened Apple Photography, Inc. on January 1 of the current year"},"content":{"rendered":"\n<p>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&#8217;s books: Andrea, the stockholder, invested $13.500 cash in the business. Andrea contributed $20,000 of photography equipment to the business. The company paid $2300 cash for an insurance policy covering the next 24 months. The company received $5700 cash for services provided during January. The company purchased $6, 200 of office equipment on credit. The company provided $2, 750 of services to customers on account. The company paid cash of $1.500 for monthly rent. The company paid $3100 on the office equipment purchased in transaction #5 above, Paid S275 cash for January utilities. Based on this information, the balance in the stockholders&#8217; equity reported on the Balance Sheet at the end of the month would be: $31.400. $39.200. $31150. $30.875.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>The correct balance in the stockholders&#8217; equity at the end of the month would be <strong>$31,150<\/strong>.<\/p>\n\n\n\n<p>Here&#8217;s a step-by-step breakdown to explain how we arrive at this figure:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. <strong>Initial Investment and Contribution<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Andrea invested $13,500 cash and contributed $20,000 of photography equipment to the business. This results in a total contribution of $33,500 to the business, which would be recorded as stockholder equity.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">2. <strong>Insurance Policy Payment<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company paid $2,300 for a 24-month insurance policy. Since the insurance policy covers multiple months, the company would record a prepaid insurance asset. However, the amount recorded as expense for January would be $2,300 \/ 24 = $95.83. This is deducted from the stockholders&#8217; equity because it&#8217;s considered an expense.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">3. <strong>Revenue from Services<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company earned $5,700 in cash for services provided during January and $2,750 in services provided on account. These amounts are considered revenues that increase stockholders&#8217; equity. The total revenue for the month is $5,700 + $2,750 = $8,450.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">4. <strong>Office Equipment Purchase<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company purchased $6,200 of office equipment on credit. This would increase the assets of the company, but it doesn&#8217;t directly affect stockholders&#8217; equity because it is financed with credit. The related liability would be reflected as accounts payable.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">5. <strong>Rent and Utilities Payments<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company paid $1,500 for rent and $275 for utilities, which are both expenses and will reduce stockholders&#8217; equity. Total expenses for rent and utilities = $1,500 + $275 = $1,775.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">6. <strong>Payment for Office Equipment<\/strong>:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company paid $3,100 in cash for the office equipment purchased earlier. This reduces cash but does not affect stockholders&#8217; equity directly since it&#8217;s already recorded as a liability and asset.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Calculation of Stockholders\u2019 Equity:<\/h3>\n\n\n\n<p><strong>Starting stockholder equity<\/strong> = $33,500 (initial investment and equipment contribution)<\/p>\n\n\n\n<p><strong>Add revenue<\/strong> = $8,450<\/p>\n\n\n\n<p><strong>Subtract expenses<\/strong> = $95.83 (insurance) + $1,775 (rent and utilities) = $1,870.83<\/p>\n\n\n\n<p><strong>Ending stockholders\u2019 equity<\/strong> = $33,500 + $8,450 &#8211; $1,870.83 = <strong>$31,150<\/strong><\/p>\n\n\n\n<p>Thus, the balance in stockholders&#8217; equity is <strong>$31,150<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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&#8217;s books: Andrea, the stockholder, invested $13.500 cash in the business. Andrea contributed $20,000 of photography equipment to the business. The company paid $2300 cash for an insurance policy covering the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-181199","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/181199","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=181199"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/181199\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=181199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=181199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=181199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}