Question

A business had $5,000 in its cash account. The business then made a payment of $125 for a utility bill and paid $200 for business supplies on the same day. The business’s only revenues for the day came from two customers who came in for products. The customers each paid $250 in cash.

Is there a debit or credit balance, and what is the amount?


Credit balance, $5,500

Debit balance, $5,125

Debit balance, $5,175

Debit balance, $4,175

Answer 1

To determine the balance of the cash account after the transactions, let's summarize the transactions step-by-step.

1. **Starting cash balance**: $5,000.

2. **Payments made**:
- Utility bill payment: **- $125**
- Business supplies payment: **- $200**

Total payments = $125 + $200 = $325.

3. **Cash received (revenues)**:
- Customer 1 payment: **+ $250**
- Customer 2 payment: **+ $250**

Total cash received = $250 + $250 = $500.

Now let's calculate the final cash balance:

1. Starting balance: $5,000
2. Subtract payments: $5,000 - $325 = $4,675
3. Add cash received: $4,675 + $500 = $5,175

Therefore, the cash balance after all transactions is **$5,175**.

Since cash accounts typically maintain a debit balance, the final statement is:

**Debit balance, $5,175**.