24. Palascak Company\'s cash balance at year end - December 31, 2015 was $165,00

Question

24. Palascak Company's cash balance at year end - December 31, 2015 was $165,000. Calculate the company's cash balance at year end - December 31, 2016, given the following information for the fiscal year ended December 31, 2015 Use the indirect method Net Income Depreciation and Amortization Increase in Accounts Receivable Decrease in Inventory Increase in Accounts Payable Net Cash Flows from Investing Activities Net Cash Flows from Financing Activities $370,000 98,000 14,000 25,000 20,000 133,000 (600,000) 25. Calculate the interest on a 10% note payable of$20,000, outstanding for 90 days (3 months)

Explanation / Answer

First we shall calculate the cash flow from operating activities aas follows:

Net Income $370000

+ Depreciation and amortization $98000

- Increase in accounts receivable ($14000)

+ Decrease in inventory $25000

+ Increase in accounts payable $20000

Cash flow from operating activities $499000

Net increase in cash = $499000 + $133000 - $600000

= $32000

Cash balance at end = $165000 + $32000 = $197000

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