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

Mathematics

Dayton Glover

28 December, 05:09

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.

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Joyce Schmitt · 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