Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the books: 1. Andrea 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 cash account at the end of January would be: Multiple Choice
Answer: $12,975
Explanation: To find the balance in the cash account at the end of January, we need to consider all cash inflows and outflows. This involves adding any cash received and subtracting any cash paid out.
Steps:
- Initial Cash Investment:
- Andrea invested $13,500 cash.
- Cash inflow: $13,500
- Cash Received for Services:
- The company received $5,700 for services.
- Cash inflow: $5,700
- Cash Paid for Insurance:
- The company paid $2,100 for an insurance policy.
- Cash outflow: $2,100
- Cash Paid for Rent:
- The company paid $1,500 for monthly rent.
- Cash outflow: $1,500
- Cash Paid for Office Equipment:
- The company paid $3,100 for office equipment.
- Cash outflow: $3,100
- Cash Paid for Utilities:
- Paid $275 for January utilities.
- Cash outflow: $275
- Calculate the Net Cash Balance:
\[
\text{Net Cash Balance} = (\text{Initial Cash} + \text{Cash Received}) - \text{Cash Paid}
\]
\[
= (13,500 + 5,700) - (2,100 + 1,500 + 3,100 + 275)
\]
\[
= 19,200 - 6,975
\]
\[
= 12,225
\]
Therefore, the balance in the cash account at the end of January is $12,225.