From the following information, calculate the net increase in cash. Earnings before interest and taxes $52,000. Depreciation expense 7,800. Decrease in prepaid expenses 1.700. Increase in accounts receivable 12,880. Purchase of machinery 32,700. Payment of dividends 11,300. Increase in bank borrowings 8,600.

Question

Guest

Mathematics

5 September, 02:29

From the following information, calculate the net increase in cash. Earnings before interest and taxes $52,000. Depreciation expense 7,800. Decrease in prepaid expenses 1.700. Increase in accounts receivable 12,880. Purchase of machinery 32,700. Payment of dividends 11,300. Increase in bank borrowings 8,600.

+3

Answers (1)

Know the Answer?

Abel Adkins · Answer 1

Answer: The net increase in cash will be a negative $32,020.

In this problem, we are starting with $52,000 in cash. All we have to do is following the steps to see where we end up at.

52000 - 7800 = 44200 Depreciation Expense

44200 - 1700 = 42500 Decrease in Prepaid Expenses

42500 + 12880 = 55380 Increase in Accounts Receivable

55380 - 32700 = 22680 Purchase of Machinery

22680 - 11300 = 11380 Payment of Dividends

11380 + 8600 = 19980 Increase in Bank Borrowing

The net amount of change is 19980 - 52000 = - $32,020