During February 2020 its first month of operations, the owner of Marigold Co. invested cash of...
During February 2020 its first month of operations, the owner of
Marigold Co. invested cash of $49200. Marigold had cash revenues of
$9200 and paid expenses of $13900. Assuming no other transactions
impacted the cash account, what is the balance in Cash at February
29?
|
a |
$4700 debit |
|
b |
$53900 debit |
|
c |
$44500 debit |
|
d |
$4700 credit |
Homework Answers
Correct Answer is Option C $ 44,500 Debit .
Explanation for the Answer is as follow :
In Example it has been asked that What is the Cash Balance at February 29 .
In Example it has been separately mentioned that February 2020 is first month of operations of Marigold Co.
The owner has invested cash of $ 49,200.
Jornal Entry for the same will be as follow :
Cash A/C Dr. $ 49,200
To Owner Capital A/c Cr. $ 49,200
Further reading forward it has been mentioned in example that Cash Ravanue of $ 9,200 has been made .
Journal Entry for the same will be as follow :
Cash A/c Dr. $ 9,200
To Ravanue A/c Cr. $9,200
Furthe Reading it has been mentioned in example that , expenses paid $ 13,900 .
Journal Entry for the same will be as follow :
Expenses A/c Dr. $ 13,900
To Cash A/c Cr. $ 13,900
It has been also mentioned in example that there is no other transaction impacted the cash account except above three transactions.
We had to find out closing balance of cash as on February 29. For that we will prepare cash account ledger for the period February.
We will post above three transactions in cash ledger to find out closing cash balance as on February 29 .
Marigold Co.
Cash Account Ledger
For the period February 2020
Dr. Cr.
| Particulars | Amount $ | Particulars | Amount $ |
| Capital A/c | 49,200 | Expenses A/c | 13,900 |
| Ravanue A/c | 9,200 | Cash Balance Cariied Forward ( Balancing Figure ) | 44,500 |
| Total | 58,400 | Total | 58,400 |
Closing Balance of Cash will be come as follow :
Capital Received in Cash $ 49,200 ( Dr )
Add February Ravanue Received in Cash $ 9,200 ( Dr )
( Less ) February Expense Paid in Cash $ (13,900 ) ( Cr )
Cash Balance as on February 29. $ 44,500 ( Dr )
Due to the above working all other options A , B and D are automatically become incorrect.
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