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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.

Respuesta :

MrEquation
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

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