You are given the following information for Thrice Corp.: Decrease in inventory $ 630 Decrease in accounts payable 265 Increase in notes payable 250 Increase in accounts receivable 280 Did cash go up or down? By how much?

Question

Business

Aedan

12 July, 06:30

You are given the following information for Thrice Corp.: Decrease in inventory $ 630 Decrease in accounts payable 265 Increase in notes payable 250 Increase in accounts receivable 280 Did cash go up or down? By how much?

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Answers (1)

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Cortez Spears · Answer 1

The cash balance would increase by $335

Explanation:

The given question shows the operating activities of the cash flow statement which deals in increasing and decrease of current assets and liabilities.

1. Decrease in inventory $ 630 increase the cash balance.

2. Decrease in accounts payable $265 decrease the cash balance. As payment would be made regarding purchase

3. Increase in notes payable $250 increase the cash balance because cash is received.

4. Increase in accounts receivable $280 decrease the cash balance because there is not any surety of cash.

After considering these cash effects, we get to know whether cash would be increased or decreased by applying the equation which is shown below:

Cash balance = Decrease in inventory + Increase in notes payable - Decrease in accounts payable - Increase in accounts receivable

= $ 630 + $250 - $265 - $280

= $335

These effects show the source and use of cash funds.

Thus, the cash balance would increase by $335.