Question

The following account balances are taken from the December 31, 2019, financial statements of Tiernan Advertising Co. The company uses accrual basis accounting Advertising Revenue Cash Accounts Receivable Interest Expense Accounts Payable Operating Expenses Deferred Revenue Equipment Income Tax Expense $ 50,596 45,630 7,697 2,378 5,170 40,983 1,280 19,732 2,530 The following activities occurred in 2020 1. Performed advertising services on account. $59,850 2. Received cash payments on account, $11.400 3. Received deposits from customers for advertising services to be performed in 2021, $3.200. 4. Mide payments to suppliers on account, $5,170 5. Incurred $49,000 of operating expenses: $42,500 was paid in cash and $6,500 was on account and unpaid as of the end of the year. What is the balance in the Cash account at December 31, 2020? Multiple Choice S49,913 145,030 511960

a) $49,913

b) $45,030

c) $11,960

d) $51,260

Answer 1

Beginning cash balance= $45,030

Cash received from customer = $11,400

Unearned revenue received from customer = $3,200

Cash payment to suppliers = $5,170

Cash paid for operating expenses = $42,500

Balance in cash account at December 31, 2020 = Beginning cash balance+ Cash received from customer+ Unearned revenue received from customer- Cash payment to suppliers-Cash paid for operating expenses

= 45,030+11,400+3,200-5,170-42,500

= $11,960

Correct option is c.

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