Answer:
The correct answer = $5,000
Explanation:
First of all, let us find the difference between the total cash provided and the total cash used up within the period:
Total cash provided = operating activities + financing activities
Total cash provided = 20,500 + 13,500 = $34,000
Total cash used up = investing activities = $11,250
Retained balance from the activities of the period = Total cash provided - Total cash used up
= 34,000 - 11,250 = $22,750
Retained balance from the activities of the period = $22,750
However, we are told that the year-end cash balance = $27,750. This means that the excess cash on the retained balance from operating activities within the period is from the beginning cash balance, and this is calculated as follows:
year-end cash balance = Retained balance from the activities + beginning cash balance
27,750 = 22,750 + beginning cash balance
∴ beginning cash balance = 27,750 - 22,750 = $5,000
∴ beginning cash balance = $5,000
