Cash Balance for Gumbo Company as of December 1

Cash Balance for Gumbo Company as of December 1

The cash balance for Gumbo Company as of December 1 should be $8,305. Notably, this cash balance value refers to the cash balance at the start of the month. It is obtained by taking the ending cash balance and considering all the cash-based transactions that occurred during the month in the reverse calculation. According to Robinson, this entails deducting transactions that increase the cash balance and adding the cash transactions that increase the cash balance. The working methodology for the calculation described means that cash received during the period is deducted from the ending cash balance. Additionally, cash amounts paid out during the period to various transactions, such as supplier payments, are added back to the ending balance to attain the opening cash balance. For the case of Gumbo Company, the calculation will be as follows.

Particulars	Amount in dollars
Cash balance as of December 31	$9,869
Less:
Cash sales	$2,763
Common stock sold	$2,550
Add:
Taxes paid	$2,032
Payments for equipment	$1,496
Dividends Paid	$221
Cash Balance as of December 1	$8,305

Transactions excluded from the calculation: credit sales of $149 and inventory received of $2,125.

As shown above, the cash balance at the start of the month is $8,305. There are some important aspects to note in the above calculation. One of those aspects relates to the nature of transactions to include in the calculation. Notably, only transactions that affect cash are considered in the calculation (Akbar et al. 102). As a result, transactions that are not cash-based are excluded from the calculation. In the case of Gumbo Company, credit sales and inventory received are ignored because they are not cash-based transactions.

Works Cited

Akbar, Ahsan, Xinfeng Jiang, and Minhas Akbar. “Do working capital management practices influence investment and financing patterns of firms?.” Journal of Economic and Administrative Sciences 38.1 (2022): 91-109.

Robinson, Thomas R. International financial statement analysis. John Wiley & Sons, 2020.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

---

This course discussion aims to apply what you have learned after reading the chapter material and reviewing the PowerPoint.
Presentations. Keep in mind that this discussion question will help prepare you for homework and future assessments, so it is important that you understand the information and actively participate in discussions. You may also have to research outside course-provided material to supplement your learning and enhance your understanding.
5. Cite all sources – all discussion posts must be referenceable, including peer interaction. This means that an exact reference must be presented for each discussion post. If referencing a textbook or PowerPoint presentation, please include the page and/or slide numbers. While personal knowledge and interaction are important, reference material is needed to support your thoughts.

Gumbo Company had the following transactions in December: What was the December 1 cash
balance?
Transactions

Dividends Paid $221

Credit Sales 149

Payments for equipment 1,496

Taxes Paid 2,032

Common stock sold 2,550

Inventory received  2,125

Cash sales 2,763

Cash balance Dec. 31 9,869