Question

On December 31, a company has the following bank accounts and corresponding cash balances:California BankOperating – Summit Ridge ($400,000)Operating – Bakersville 300,000Operating – Smithville 50,000Savings 500,000Sedona BankChecking ($375,000)How should the company report the above bank account balances in the balance sheet at December 31?A. Cash of $75,000.B. Cash of $450,000 and a liability of $375,000.C. Cash of $850,000 and a liability of $775,000.D. Cash of $800,000 and a liability of $725,000.

Answer 1

A. Cash of $75,000.

Step-by-step explanation:

Net sum of all accounts = ($400,000) + $300,000 +$50,000 + $500,000 + ($375,000)

= $75,000

Given that the net position is positive, this will be recorded as cash of $75,000 in the balance sheet at December 31.

Therefore, the right answer is A. Cash of $75,000.