On December 31, 2018, the balance sheet of Roberts Realty reported total assets of $200,000. The following transactions occurred during the month of January 2019:
(1) The business purchased land for $250,000, paying $100,000 cash and issuing a note payable for the balance.
(2) The business collected accounts receivable totaling $45,000.
(3) The business sold land (which had cost $50,000) for $60,000 cash.
(4) The business paid off $50,000 of Notes Payable.
What is the amount of the company’s total assets on January 31, 2019?

Question

On December 31, 2018, the balance sheet of Roberts Realty reported total assets of $200,000.  The following transactions occurred during the month of January 2019: 
    (1)  The business purchased land for $250,000, paying $100,000 cash and issuing a note payable for the balance. 
    (2)  The business collected accounts receivable totaling $45,000. 
    (3)  The business sold land (which had cost $50,000) for $60,000 cash. 
    (4)  The business paid off $50,000 of Notes Payable. 
What is the amount of the company’s total assets on January 31, 2019?

BlackTom AI · Accepted Answer

To tackle the problem, I’ll track how each transaction changes assets and liabilities, since total assets depend on those movements.
Option A: $365,000. Consider if this were the final asset total. After the first transaction, assets rise by 150,000 (land +250,000, cash −100,000), so from 200,000 to 350,000. The second transaction merely exchanges receivables for cash, leaving total assets unchanged at 350,000. The third transaction increases assets by 10,000 (cash +60,000, land −50,000 in cost), bringing assets to 360,000. The fourth transaction pays 50,000 toward notes payable, which decreases cash by 50,000 and decreases liabilities by 50,000; this reduces total assets to 310,000, not 365,000. Therefore 365,000 is incorrect.
Option B: $455,000. This would require larger increases in assets than what occurred. The sequence above shows increases totaling 150,000 (step 1) and 10,000 (step 3), for a net asset change before step 4 of +160,000 from the starting 200,000, giving 360,000 prior to step 4. The final step reduces assets by 50,000, so the ending total cannot reach 455,000. Hence B is incorrect.
Option C: $460,000. Similar to option B, this would imply an even larger asset accumulation than the actual transactions produce. The calculations show ending assets cannot exceed the 360,000 level before the payoff of debt, and step 4 reduces assets to 310,000. Therefore 460,000 is not attainable here, making C incorrect.
Option D: $310,000. This matches the correct sequence of changes: starting at 200,000, step 1 increases assets by 150,000 to 350,000, step 2 keeps assets at 350,000, step 3 adds 10,000 for a total of 360,000, and step 4 reduces assets by 50,000 (cash paid) while also reducing liabilities by 50,000, resulting in total assets of 310,000. All parts align with the accounting effects of each transaction, so D is the correct total asset figure.

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