Larry Bar opened an frame shop and completed these transactions: 1.Larry started the shop by investing $40,000 cash and equipment valued at $18,000.
2)Purchased $70 of office supplies on credit.
3)Paid $1,200 cash for the receptionist's salary.
4)Sold a custom frame service and collected a $1,500 cash on the sale.
5)Completed framing services and billed the client $200.
What was the balance of the cash account after these transactions were posted?
A)$300.
B)$41,500.
C)$40,300.
D)$38,500.
E)$38,700.

Question

Quizplus · Accepted Answer

1) Larry invested $40,000 in cash and $18,000 in equipment, which totals $58,000.
2) He purchased $70 of office supplies on credit, so there is no immediate effect on the cash account.
3) He paid $1,200 for the receptionist's salary, which reduces the cash account to $56,800.
4) He sold a custom frame service for $1,500 and collected this amount in cash, increasing the cash account to $58,300.
5) He completed a framing service and billed the client $200, but did not yet receive any cash for it, so there is no effect on the cash account.
Overall, the cash account increased from $40,000 to $58,300, so the balance is $40,000 + $18,300 = $40,300. Therefore, the choice is C.

Larry Bar Opened an Frame Shop and Completed These Transactions