Question

8. Brighton Company received $32,000 cash from the issue of common stock on January 1, 2019, its first date of operations. During 2019, Brighton earned $14,500 of revenue on account. The company also collected $4,500 cash from accounts receivable and paid $2,000 cash for rent expense during 2019. The company also accrued $5,000 for salaries expense during 2019, payable in 2020. Based on this information alone, the cash balance at December 31, 2019 was

a. $ 29,500.
b. $ 34,500.
c. $ 40,000.
d. $ 49,000.

Answer 1

Correct answer---------------(b) $34,500

Working

Cash received on issue of common stock	$         32,000.00
Collection from customers	$            4,500.00
Rent paid in cash	$         (2,000.00)
Cash balance on December 31 2019	$         34,500.00

Sales revenue do not affect cash balance unless sales is on cash. Cash received on sale affects cash.

Salaries accrued will not reduce cash balance for the year only cash salary paid will.