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Financial & Managerial Accounting
Found in: Page 89
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Yi Min started an engineering firm called Min Engineering. He began operations and completed seven transactions in May, which included his initial investment of $18,000 cash. After those seven transactions, the ledger included the following accounts with normal balances.

Cash ……………………………………….. $37,600

Office supplies ………………………………... 890

Prepaid insurance …………………………...4,600

Office equipment ………………………….. 12,900

Accounts payable …………………………..12,900

Common stock …………………………….. 18,000

Dividends …………………………………….. 3,370

Engineering fees earned …………………. 36,000

Rent expense ………………………………… 7,540

Required

2. The following seven transactions produced the account balances shown above.

a. Y. Min invested $18,000 cash in the business in exchange for common stock.

b. Paid $7,540 cash for monthly rent expense for May.

c. Paid $4,600 cash in advance for the annual insurance premium beginning the next period.

d. Purchased office supplies for $890 cash.

e. Purchased $12,900 of office equipment on credit (with accounts payable).

f. Received $36,000 cash for engineering services provided in May.

g. The company paid $3,370 cash in dividends.

Prepare a Cash T-account, enter the cash effects (if any) of each transaction, and compute the ending Cash balance (code each entry in the T-account with one of the transaction codes a through g).

The given cash account has a debit balance of $37,600.

See the step by step solution

Step by Step Solution

Cash Account

A cash account is the summary of all cash and receipts of a particular period. The inflows of cash are debited to the cash account and the outflows are credited to them. Cash accounts generally have a debit balance.

Cash account in the given case                                                                  

Cash Account

a.

$ 18,000

$ 7,540

b.

f.

36,000

4,600

c.

890

d.

3,370

g.

Balance

$ 37,600

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