Alvez reports net income of $347,500 for the year ended December 31. It also reports $115,800 depreciation expense and a $12,550 loss on the sale of equipment. Its comparative balance sheet reveals a $50,400 increase in accounts receivable, a $12,750 decrease in prepaid expenses, a $19,450 increase in accounts payable, a $15,900 decrease in wages payable, a $93,700 increase in equipment, and a $125,500 decrease in notes payable. Calculate the net increase in cash for the year.

Question

Business

Cassie Hart

30 October, 19:22

Alvez reports net income of $347,500 for the year ended December 31. It also reports $115,800 depreciation expense and a $12,550 loss on the sale of equipment. Its comparative balance sheet reveals a $50,400 increase in accounts receivable, a $12,750 decrease in prepaid expenses, a $19,450 increase in accounts payable, a $15,900 decrease in wages payable, a $93,700 increase in equipment, and a $125,500 decrease in notes payable. Calculate the net increase in cash for the year.

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Judith Dominguez · Answer 1

Answer: $222,550

Explanation: As we know that : -

Net cash increase = cash flow from operating activities + cash flow from investing activities + cash flow from financing activities

we can calculate these cash flows as follows : -

cash flow from operating activities = net income + depreciation expense + loss on sale of equipment + increase in accounts payable - increase in accounts receivable + decrease in wages payable

cash flow from operating activities = 347,500 + 115800 + 12,550 + 12,750 + 19,450 - 50,400 - 15,900 = $441,750

similarly,

cash flow from investing activities = purchase of equipment = - $93700

cash flow from financing activities = notes payable payments = -$125,500

so,

Net cash increase = $441,750 - $93700 - $125,500 = $222,550