Table 1-3
Ace Builders had the following transactions in June: earned $4,000 "on account" that will be collected in cash next month; collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 cash to a supplier that it owed from the previous month; paid out $800 in cash withdrawals to the owner.
-For Ace Builders, what is the combined effect on cash from the June transactions?
A)Down $800
B)Down $2,500
C)Up $4,500
D)Up $500

Question

Quizplus · Accepted Answer

The combined effect on cash from the June transactions is an increase of $500. This is calculated by adding the cash collected from a customer ($3,000), and subtracting the cash paid for repair expenses ($500), cash paid to a supplier ($1,200), and cash withdrawals to the owner ($800). The $4,000 earned "on account" does not affect cash this month as it will be collected next month. Therefore, $3,000 - $500 - $1,200 - $800 = $500 increase in cash.

Table 1-3 Ace Builders Had the Following Transactions in June: Earned $4,000