Question

On May 1, D.R.Y. Inc. had a beginning cash balance of $690. April sales were $810, and May sales were $990. Cash expenses of $130 and payments on accounts payable of $370 were paid during May. The accounts receivable period is 30 days. What is D.R.Y.'s beginning cash balance on June 1?

A)$800
B)$940
C)$1000

Answer 1

D.R.Y. Inc.'s beginning cash balance on June 1 is calculated by adding April sales collected in May to the May 1 cash balance and subtracting cash expenses and accounts payable paid in May. The correct answer is $1,000. Option C) $1,000 is the correct choice.

Step-by-step explanation:

To calculate D.R.Y. Inc.'s beginning cash balance on June 1, we must consider their starting cash, cash generated from sales, and cash expenditures during May. Since accounts receivable period is 30 days, the April sales will be collected in May. Therefore, $810 from April sales will be added, and $990 from May sales is not yet collected.

Here is the step-by-step calculation:

Begin with the starting cash balance on May 1: $690.

Add cash received from April sales: $810.

Subtract cash expenses paid during May: $130.

Subtract payments on accounts payable made during May: $370.

The resulting cash balance at the beginning of June would be ($690 + $810) - ($130 + $370) = $1,500 - $500 = $1,000. Among the choices provided, Option C) $1,000, is the correct answer.