Question

Milo has the following year-end account balances: Accounts Receivable, $5,000; Supplies, $12,000; Equipment, $18,000; Accounts Payable, $17,000; Owner’s Equity, $43,000. The Cash account balance was not available at year-end. Given the account balances listed, the balance in the Cash account should be

Answer 1

Answer:

$25,000

Explanation:

Calculation for what the balance in the Cash account should be

First step is to calculate for the Total Assets excluding Cash

Total Assets excluding Cash = $5,000 + $12,000 + $18,000

Total Assets excluding Cash = $35,000

Second step is to find the Total Liabilities & shareholder's equity

Total Liabilities & shareholder's equity = $17,000 + $43,000

Total Liabilities & shareholder's equity == $60,000

Last step is to calculate for the cash balance using this formula

Cash balance = Total Liabilities and shareholder's equity - Total Assets (excluding cash)

Cash balance = $60,000 - $35,000

Cash balance = $25,000

Therefore the balance in the Cash account should be $25,000