Question

During February 2017, its first month of operations, the owner of Schwenn Enterprises invested cash of $100,000. Schwenn has cash sales of $20,000 and paid expenses of $35,000. Assuming no other transactions impacted the cash account, what is the balance in cash at February 28?

Answer 1

Answer:

Cash balance is $85,000

Explanation:

In determining the cash balance of the period, we must know how much is the inflow and outflow of the cash for the period and add it or deduct to the beginning balance. It is simply, beginning balance plus inflows less outflows. February is the first month of the operation of Schwenn Enterprises, that only means the possible beginning balance of the cash is the cash investment. So to further discuss it clearly, let’s do the computation.

Beginning balance on February $100,000

Add: inflow

Cash sales $20,000

Less: outflow

payment on expenses $35,000

CASH BALANCE AT FEBRUARY 28 $85,000