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Consider the Following T-Account for Cash: Balance and Transaction Examples

The Cash account has a $4,800 debit balance; transaction examples distinguish receipts and payments from revenue and expenses.

Question

Consider the following T-account for cash.

Debit (left), $Credit (right), $
12,0007,200
3,4001,400
2,5004,500
  1. Find the remaining Cash balance and its debit or credit side.
  2. Suggest transactions consistent with the 3,400-dollar debit.
  3. Suggest transactions consistent with the 1,400-dollar credit.

Answer

1. Cash balance

Cash is an asset: debits on the left increase it, and credits on the right decrease it.

CalculationAmount ($)
Debit total: 12,000 + 3,400 + 2,50017,900
Credit total: 7,200 + 1,400 + 4,50013,100
Remaining debit balance: 17,900 − 13,1004,800

The Cash account therefore has a $4,800 debit balance. No additional opening balance is supplied or added.

2. Possible transactions for the $3,400 debit

Each of these alternatives would increase Cash by $3,400:

  • A customer pays $3,400 for services provided now: debit Cash; credit Service Revenue.
  • A customer settles a previously recorded $3,400 receivable: debit Cash; credit Accounts Receivable.
  • A bank lends the company $3,400: debit Cash; credit Notes Payable.

These are alternative explanations for one posting, not three transactions to add together.

3. Possible transactions for the $1,400 credit

Each alternative would reduce Cash by $1,400:

  • Pay $1,400 of current-period rent: debit Rent Expense; credit Cash.
  • Settle a $1,400 supplier payable: debit Accounts Payable; credit Cash.
  • Purchase $1,400 of equipment for cash: debit Equipment; credit Cash.

A cash decrease is not automatically an expense, just as a cash increase is not automatically revenue. The offsetting account depends on the transaction.

Evidence boundary

This solution uses BE2–9’s 12,000/12,000/3,400/2,500debitand2,500 debit and 7,200/1,400/1,400/4,500 credit version. The indexed textbook provides all three requirements; direct PDF retrieval was unavailable during review. Transaction examples are possibilities, not facts recoverable from the amounts alone. No extra opening balance is assumed.

Sources

These references support the concepts and methods used in the explanation above.

Consider the Following T-Account for Cash: Balance and Transaction Examples | Verla