The Reflection on Cash Account Balance Changes

How does the issuance of $25,000 common stock for cash affect Acme's cash account balance?

If during the month, Acme issued $25,000 of common stock for cash, what will be the impact on the cash account balance?

Impact of Issuance of $25,000 Common Stock for Cash

When Acme issued $25,000 of common stock for cash, the balance in the cash account changed. Let's explore how this transaction affected the cash account balance.

When a company like Acme issues common stock for cash, it results in an increase in cash inflow. This means that the cash balance in Acme's account will rise due to the funds received from the issuance of common stock.

Since the beginning balance of Acme's cash account was $100,000 and an additional $25,000 was added through the issuance of common stock, the new cash account balance will be calculated as follows:

Cash account balance:

$100,000 (Beginning balance) + $25,000 (Issued common stock for cash) = $125,000 (Debit)

Therefore, the issuance of $25,000 common stock for cash resulted in a debit balance of $125,000 in Acme's cash account.

This change in the cash account balance reflects the financial impact of the transaction and highlights the importance of accurately tracking and recording all financial activities to maintain a clear picture of a company's financial health.