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.

Question

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.