Question

Marco Nelson opened a frame shop and completed these transactions: Marco started the shop by investing $40,200 cash and equipment valued at $18,200 in exchange for common stock. Purchased $90 of office supplies on credit. Paid $1,400 cash for the receptionist's salary. Sold a custom frame service and collected $4,700 cash on the sale. Completed framing services and billed the client $220. What was the balance of the cash account after these transactions were posted?

Answer 1

After the transactions, including investment, sale, salary payment, and billing, the balance of Marco Nelson's cash account is $43,500.

Step-by-step explanation:

The question involves calculating the balance of Marco Nelson's cash account after a series of business transactions for his frame shop. To find the balance, we need to consider the cash inflows and outflows from the transactions. Marco started the shop with an investment, which is a cash inflow of $40,200. The purchase of office supplies on credit does not affect the cash account. Paying the receptionist's salary is a cash outflow of $1,400, and collecting cash from a sale is an inflow of $4,700. The billing of a client for framing services does not affect the cash account as it is a transaction on account.

To determine the cash balance, we perform the following calculation: Initial cash (+$40,200) plus cash from sales (+$4,700) minus the receptionist's salary (-$1,400). The result is $43,500, which is the balance of the cash account after these transactions.

Answer 2

$43,500

Step-by-step explanation:

Calculation for the balance of the cash account after these transactions were posted

Using this formula

Cash account balance =Amount invested-Receptionist's salary+Cash on sale

Let plug in the formula

Cash account balance =$40,200-$1,400+$4,700

Cash account balance =$43,500

Therefore the balance of the cash account after these transactions were posted will be $43,500