For the current year, Davis Corporation’s statement of cash flows reveals the following information: Net cash flows from operating activities: $ 48,000Net cash flows from investing activities: $ 12,000Net cash flows from financing activities: $ 30,000Cash at the end of the year: $ 210,000What was the company’s cash balance at the beginning of the year?Multiple Choice$210,000$90,000$120,000$300,000
Question
For the current year, Davis Corporation’s statement of cash flows reveals the following information: Net cash flows from operating activities: 12,000Net cash flows from financing activities: 210,000What was the company’s cash balance at the beginning of the year?Multiple Choice90,000300,000
Solution
To find the company's cash balance at the beginning of the year, we need to understand that the net cash flow (which is the sum of the cash flows from operating, investing, and financing activities) is equal to the difference between the ending and beginning cash balances.
Here's how to calculate it:
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First, calculate the total net cash flow for the year by adding the net cash flows from operating, investing, and financing activities.
Net cash flows from operating activities = 12,000 Net cash flows from financing activities = $30,000
Total net cash flow = 12,000 + 90,000
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Then, use the total net cash flow to find the beginning cash balance. We know that:
Ending cash balance = Beginning cash balance + Net cash flow
So, to find the beginning cash balance, we rearrange the equation to:
Beginning cash balance = Ending cash balance - Net cash flow
Plugging in the given values:
Beginning cash balance = 90,000 = $120,000
So, the company's cash balance at the beginning of the year was $120,000.
Similar Questions
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