A business had $10,000 in its cash account. The business then made a payment of $135 for a utility bill and paid $175 for business supplies on the same day. The business’s only revenues for the day came from two customers who came in for consultations. The customers each paid $250 in cash.

Question

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

Credit balance, $310

Credit balance, $10,500

Credit balance, $10,810

Debit balance, $10,190

Answer 1

To determine the balance in the business's cash account after the transactions, we need to account for all cash inflows and outflows.

1. Beginning cash balance: $10,000

2. Cash outflows:

   • Utility bill payment: $135
   • Business supplies payment: $175

   Total cash outflows = $135 + $175 = $310

3. Cash inflows:

   • Revenue from two customers: 2 * $250 = $500

Now, we will calculate the new cash balance:

• New balance = Beginning cash balance - Cash outflows + Cash inflows
• New balance = $10,000 - $310 + $500
• New balance = $10,000 + $190
• New balance = $10,190

Thus, the cash account has a debit balance of $10,190.

The correct answer is: Debit balance, $10,190.