Question

Tri Fecta, a partnership, had revenues of $378,000 in its first year of operations. The partnership has not collected on $47,000 of its sales and still owes $38,700 on $235,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,100 in salaries. The partners invested $47,000 in the business and $26,000 was borrowed on a five-year note. The partnership paid $2,600 in interest that was the amount owed for the year and paid $8,900 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

Answer: $168,000

Step-by-step explanation:

Cash balance at the end of the year = Cash Inflows - Cash outflows

Cash Outflows

= (Merchandise purchased - Account payables) + Salaries + Interest + Insurance

= (235,000 - 38,700) + 28,100 + 2,600 + 8,900

= $235,900

Cash Inflows

= (Sales - Accounts receivables) + Investment by partners + Amount borrowed

= (378,000 - 47,000) + 47,000 + 26,000

= $404,000

Cash Balance = $168,000

Note: The options are most probably for a similar question.