Question

Mayweather reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the net increase in cash for the year.

Answer 1

206,400.00

Step-by-step explanation:

Calculation for the net increase in cash for the year

Net Income 305,000

Adjustment to reconcile Net Income to Net Cash

Add:

Depreciation Expense 93,700

Loss on sale of equipment 10,000

Cash flow from Operations 408,700

(305,000+93,700+10,000)

Changes in Current Assets/Current Liabilities

Less Increase in Accounts Receivable (40,200)

Decrease in Prepaid Expenses 10,200

Increase in Accounts Payable 15,200

Less Decrease in Wages Payable (12,500) (27,300)

Net cash provided by operating activities 381,400

(408,700-27,300)

Cash flow from investing activities

Increase in equipment (75,000)

Net cash provided by investing activities (75,000)

Cash flow from financing activities

Decrease in Notes payable (100,000)

Net cash provided by financing activities (100,000)

Net Increase/(Decrease) in cash $206,400

Therefore the net increase in cash for the year will be $206,400