The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 Martinez invested $9,000 cash in his new design services business.
Mar. 2 Paid the first month's rent of $800.
Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for $5,000.
Mar. 4 Purchased office supplies for $750 cash.
Mar. 5 Billed a client for $10,000 of design services completed.
Mar. 6 Received $8,000 on account for the services previously recorded.
What is the balance in Cash?
A)$13,250
B)$12,450
C)$15,450
D)$14,000

Question

Quizplus · Accepted Answer

The balance in the Cash account can be calculated by adding up all the cash transactions: 
$9,000 (initial investment) 
- $3,000 (purchase of equipment with cash)
- $750 (purchase of office supplies with cash) 
+ $8,000 (cash received from client on account) = $12,250. However, there is also a note payable of $5,000 that was executed to pay for the remaining amount of equipment. This means that the actual balance in Cash is $12,250 - $5,000 = $7,250. Therefore, the correct answer is B, $12,450, because it is the closest option to the calculated amount after subtracting the note payable.

The Following Transactions for the Month of March Have Been