Owner withdrawals: Owner withdrawals refer to the withdrawals of money by the owner from the business for his/her personal use. This decreases the owner’s equity account. As owner’s drawing account is increased by debits, and decreased by credits, it has a normal debit balance. To discuss: The cause of the unusual balance of the cash account with a credit balance of $1,850, assuming that no errors have occurred during journalizing, and posting.

Question

McIntyre Company adheres to a policy of depositing all cash receipts in a bank account and making all payments by check. The cash account asof December 31 has a credit balance of $1,850, and there is no undeposited cash on hand.(a) Assuming that no errors occurred during journalizingor posting, what caused this unusual balance?(b) Is the $1,850 credit balance in the cashaccount an asset, a liability, owner’s equity, a revenue,or an expense?

Answer 1

Question

Chapter 2, Problem 3DQ

(a)

To determine

Owner withdrawals:

Owner withdrawals refer to the withdrawals of money by the owner from the business for his/her personal use. This decreases the owner’s equity account. As owner’s drawing account is increased by debits, and decreased by credits, it has a normal debit balance.

To discuss: The cause of the unusual balance of the cash account with a credit balance of $1,850, assuming that no errors have occurred during journalizing, and posting.

(b)

To determine

To identify: Whether the credit balance of $1,850 in the cash account is an asset, a liability, owner’s equity, revenue, or an expense.

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