Question

5. On June 1, 2008, Delbert Inc. reported a cash balance of $12,000. During June, Delbert made deposits of $3,000 and made disbursements totalling $16,000. What is the cash balance at the end of June?

a.   $1,000 debit balance

b.   $15,000 debit balance

c.   $1,000 credit balance

d.   $4,000 credit balance

    6.     At January 1, 2008, Burton Industries reported owner’s equity of $130,000. During 2008, Burton had a net income of $30,000 and owner drawings of $20,000. At December 31, 2008, the amount of owner’s equity is

a.   $130,000.

b.   $140,000.

c.   $100,000.

d.   $80,000.

    7.     Able Company pays its employees twice a month, on the 7^th and the 21^st. On June 21, Able Company paid employee salaries of $5,000. This transaction would

a.   decrease net income for the month by $5,000.

b.   increase owner’s equity by $4,000.

c.   decrease the balance in Salaries Expense by $4,000.

d.   be recorded by a $4,000 debit to Salaries Payable and a $4,000 credit to Salaries Expense.

Answer 1

5)

c.   $1,000 credit balance

Working:

Cash is an asset and it has debit balance.When it is increased, it is debited and credited when decreased.

So, Cash balance at the end of June is calculated as follows:

Beginnng Balance

$           12,000

Debit

Add:Cash deposit

$             3,000

Debit

Cash Available before disbursement

$           15,000

Debit

Less:Cash disbursement

$           16,000

Credit

Ending Cash Balance

$             1,000

Credit

6)

b.   $140,000

Working:

Bgeinning Owner's Equity

$       1,30,000

Add:Net Income

$           30,000

Less:Drawings

$           20,000

Ending Owner's Equity

$       1,40,000

7)

a.   decrease net income for the month by $5,000.

Working:

Salaries are expense.When it is incurred, profit is reduced.

Salaries are paid by $ 5,000.So, Net income will be reduced by $ 5,000.