ABC Company has the following accounts and balances: Account Balance Cash $? Land $90,000 Notes Payable $125,000 Common Stock $100,000 Retained Earnings $135,000 Based on the above information only, the balance for the Cash account must be: Group of answer choices $35,000 $110,000 $450,000 $270,000

Question

Business

Ryann Harmon

1 June, 22:15

ABC Company has the following accounts and balances: Account Balance Cash $? Land $90,000 Notes Payable $125,000 Common Stock $100,000 Retained Earnings $135,000 Based on the above information only, the balance for the Cash account must be: Group of answer choices $35,000 $110,000 $450,000 $270,000

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Answers (1)

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Mylie Christian · Answer 1

The balance of cash account would be $270,000

Explanation:

In order to compute the cash account balance, we will be using the Accounting Equation of the Accounts. which is:

Assets = Liabilities + Shareholders equity

So,

Assets will involve cash, land

Liabilities will involve Notes Payable

Shareholders Equity will involve Retained Earnings (RE) and Common Stock

Therefore,

Cash + Land = Notes Payable + Retained Earnings (RE) + Common Stock

Putting the values:

Cash + $90,000 = $125,000 + $135,000 + $100,000

Cash = $125,000 + $135,000 + $100,000 - $90,000

Cash = $270,000