McIntyre Company adheres to a policy of depositing all cash receipts in a bank account and making all payments by check. The cash account as of December 31 has a credit balance of $1,850, and there is no undeposited cash on hand. (A) Assuming no errors occurred during journalizing or posting, what caused this unusual balance? (B) Is the $1,850 credit balance in the cash account an asset, a liability, stockholders’ equity, a revenue, or an expense?

Q: Expert Answer

(a) To determine Owner withdrawals: Owner withdrawals refer to the withdrawals of money by the owner from the business for his/her personal use. This decreases the owner’s equity account. As owner’s drawing account is increased by debits, and decreased by credits, it has a normal debit balance. To discuss: The cause of the unusual balance of the cash account with a credit balance of $1,850, assuming that no errors have occurred during journalizing, and posting. Explanation Assuming that no errors have occurred during journalizing, and posting the unusual balance of the cash account wi... (b) To determine To identify: Whether the credit balance of $1,850 in the cash account is an asset, a liability, owner’s equity, revenue, or an expense.

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Financial & Managerial Accounting

13th Edition

Carl Warren + 2 others

Publisher: Cengage Learning

ISBN: 9781285866307

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BuyFind

Financial & Managerial Accounting

13th Edition

Carl Warren + 2 others

Publisher: Cengage Learning

ISBN: 9781285866307

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Answer 3

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Answer 5

(a)

To determine

Owner withdrawals:

Owner withdrawals refer to the withdrawals of money by the owner from the business for his/her personal use. This decreases the owner’s equity account. As owner’s drawing account is increased by debits, and decreased by credits, it has a normal debit balance.

To discuss: The cause of the unusual balance of the cash account with a credit balance of $1,850, assuming that no errors have occurred during journalizing, and posting.

Explanation of Solution

Assuming that no errors have occurred during journalizing, and posting the unusual balance of the cash account wi...

Answer 6

(b)

To determine

To identify: Whether the credit balance of $1,850 in the cash account is an asset, a liability, owner’s equity, revenue, or an expense.

Financial & Managerial Accounting

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Financial & Managerial Accounting

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