Question

Napa Valley Wines opened a new store and completed the following transactions during June: Shareholders invested...

Napa Valley Wines opened a new store and completed the following transactions during June:

Shareholders invested $250,000 cash in exchange for common stock.

Purchased a delivery truck for $15,000 cash.

Purchased $5,000 of wine on account. Paid $3,000 toward the outstanding account balance. At the end of the month, $400 of inventory remained on hand.

Paid $6,000 for selling expenses.

Sold wine to customers and collected $18,000 cash. Billed corporate clients for an additional $2,500 of wine delivered during June.

How much will the company report on its Balance Sheet as ‘Cash’ on June 30?

a. 54,400

b. 56,800

c. 144,000

d. 244,000

Business   Accounting   
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Answer #1

Correct answer---(d) $244,000

Calculation of ending cash balance

Inflow

Issue of common stock

$ 2,50,000.00

Collection from customers

$      18,000.00

Outflow

Purchase of truck

$   (15,000.00)

Payment towards outstanding account

$      (3,000.00)

Selling expenses paid

$      (6,000.00)

Ending cash balance

$ 2,44,000.00

Purchase of Wine on account, Billing of client are not cash transactions so they will not affect cash balance.

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