Question

Mayweather reports net income of $330,000 for the year ended December 31. It also reports a $106,700 depreciation expense and a $11,500 loss on the sale of equipment. Its comparative balance sheet reveals a $46,200 increase in accounts receivable, a $11,700 decrease in prepaid expenses, a $17,700 increase in accounts payable, a $14,500 decrease in wages payable, a $86,000 increase in equipment, and a $115,000 decrease in notes payable.

Calculate the net increase in cash for the year.

Answer 1

The net increase in cash was 215,900

Step-by-step explanation:

In order to calculate the cash increase we will start from net income, add depreciation expense because it is a non cash expense, add the loss on equipment because the loss on equipment isn't reducing cash, then we will subtract the increase in accounts receivable because it is an asset which is increasing ,then we will add the decrease in prepaid expenses as it is an asset decreasing,then we will add the increase in accounts payable as it is a liability which is increasing, we will subtract the decrease in the wages payable because it is a liability which is decreasing, we will subtract the increase in equipment as it is a asset increasing and at the end we will subtract the decrease in notes payable as it is a liability which is decreasing.

330,000

+106,700

+11,500

-46,200

+11,700

+17,700

-14,500

-86,000

-115,000

=215,900

The net increase in cash was 215,900