Question

Tri Fecta, a partnership, had revenues of $364,000 in its first year of operations. The partnership has not collected on $45,100 of its sales and still owes $38,400 on $220,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,300 in salaries. The partners invested $46,000 in the business and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest that was the amount owed for the year and paid $9,400 for a two-year insurance policy on the first day of business. Ignore income taxes.Compute the cash balance at the end of the first year for Tri Fecta.

a) $ 332,110
b) $ 161,640
c) $ 166,290
d) $ 155,440

Answer 1

$167,600

Step-by-step explanation:

Net income:

Sales revenue $364,000

- COGS $220,000

- Salaries $28,300

- Interest $3,000

- Insurance $4,700

Net Income $108,000

Cash flow from operating activities:

Net income $108,000

adjusting entries:

• accounts receivable ($45,100)
• accounts payable $38,400
• prepaid insurance ($4,700)

Net cash flow from operating activities $96,600

Cash flow from financing activities:

capital invested $46,000

money borrowed $25,000

Net cash flow from financing activities $71,000

Cash balance $167,600