LO 4 S2.9. (Learning Objective 4: Analyze the impact of business transactions on

Question

LO 4 S2.9. (Learning Objective 4: Analyze the impact of business transactions on accounts Gloria Varay, MD, opened a medical practice. The business completed the following transactions Varay invested $29,000 cash to start her medical practice. The business issued common stock to Varay Purchased medical supplies on account totaling $9,200. 3 Paid monthly office rent of $4,000 Recorded $7,100 revenue (in cash) for service rendered to patients. July 1 2 6 After these transactions, how much cash does the business have to work with? Use a T-account to show your answer.

Explanation / Answer

We have to prepare a T-account of cash for calculating cash balance after all the above transactions which is shown as follows:- (Amounts in $)

Cash will be increase by $29,000 on July 1. There will be no effect on cash balance after the transaction occurred on July 2 as there is no cash inflow or outflow. Cash will decrease on July 3 and increase on July 6.

Therefore, the business will have $32,100 as cash balance to work with.

Date Account Titles Debit Credit Balance July 1 Common Stock 29,000 0 29,000 July 2 0 0 29,000 July 3 Rent expense 0 4,000 25,000 July 4 Service revenue 7,100 0 32,100

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.