Question

In the first month of operations for Gallowsbird Industries, the total of the debit entries to the cash account amounted to $36,000 ($16,000 investment by stockholders and revenues of $20,000). The total of the credit entries to the cash account amounted to $22,000 (purchase of equipment $8,000 and payment of expenses $14,000). At the end of the month, the cash account has a(n) _______.a. $6,000 credit balance.b. $6,000 debit balance.c. $14,000 debit balance.d. $14,000 credit balance.

Answer 1

Answer:

The correct answer is C

Explanation:

At the month end, the cash account balance would be computed as:

Balance of cash account = Debit balance of cash account - Credit balance of cash account

where

Debit balance of cash account is $36,000

Credit balance of cash account is $22,000

Putting the values above:

Balance of cash account = $36,000 - $22,000

= $14,000

As the balance of debit is more than the credit so, it is the debit balance of $14,000.