Question

Assume Lee Services began the year with the following balances: Cash, $11,000; Accounts receivable, $10,200; and Common stock, $21,200.

Jan. 1 Edward Lee invested $20,200 cash in the company in exchange for common stock.
Jan. 2 The company provided services to a client and immediately received $1,500 cash.
Jan. 3 The company received $10,200 cash from a client in payment for services to be provided next year.
Jan. 4 The company received $3,900 cash from a client in partial payment of accounts receivable.
Jan. 5 The company borrowed $6,000 cash from the bank by signing a note payable.

What is the total amount of cash at the end of January?
a) $30,200
b) $22,700
c) $27,200
d) $25,200

Answer 1

The total amount of cash at the end of January is $40,800.

Step-by-step explanation:

To calculate the total amount of cash at the end of January, we need to consider the cash inflows and outflows during the month. The company began with a cash balance of $11,000 and received additional cash from various sources.

On Jan. 1, the company received $20,200 cash from Edward Lee as an investment, bringing the total cash balance to $31,200. On Jan. 2, the company received $1,500 cash from a client, increasing the cash balance to $32,700. On Jan. 3, the company received $10,200 cash from a client in advance for services to be provided in the future, resulting in a cash balance of $42,900. On Jan. 4, the company received $3,900 cash from a client as partial payment of accounts receivable, increasing the cash balance to $46,800. Lastly, on Jan. 5, the company borrowed $6,000 cash from the bank, resulting in a final cash balance of $40,800.