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 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 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... (b) To determine 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 And Managerial Accounting

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Publisher: Cengage Learning,

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BuyFind

Financial And Managerial Accounting

15th Edition

WARREN + 1 other

Publisher: Cengage Learning,

ISBN: 9781337902663

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Section

Answer 3

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Answer 4

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Answer 5

(a)

To determine

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

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...

Answer 6

(b)

To determine

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 And Managerial Accounting

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Financial And Managerial Accounting

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