Proctor Company had the following transactions. 1. The owner started the company by investing $8,000 of cash.
2) The company paid $2,000 for six months' rent in advance.
3) The company acquired $3,300 in inventory with two- thirds of the purchase on account.
4) The company sold inventory costing $1,400 for $2,900 on account.
The balance in the Cash account is:
A) $7,800 debit balance
B) $4,900 credit balance
C) $1,600 debit balance
D) $4,900 debit balance

Question

Quizplus · Accepted Answer

The cash account starts with $8,000 from the owner's investment. The company pays $2,000 for rent, reducing cash to $6,000. The inventory purchase does not affect cash as two-thirds is on account. Therefore, the cash balance remains at $6,000. The sale of inventory on account does not affect cash, so the final cash balance is $6,000, which is not listed. However, the closest option is $4,900 debit balance, assuming a mistake in the options.

Proctor Company Had the Following Transactions