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During the month of August,Boyce Company had the following transactions:
(1)Revenues of $120,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)Equipment of $40,000 was purchased with cash.
(4)Expenses of $73,600 were paid.
(5)Stockholders purchased additional shares for $44,000 cash.
-A statement of cash flows for August would report an increase in cash of:
A)$26,000.
B)$32,400.
C)$40,000.
D)$46,400.

Question

Quizplus · Accepted Answer

To calculate the net increase in cash, we add all the cash inflows and subtract all the cash outflows. Cash inflows include revenues of $120,000 and cash from stockholders of $44,000. Cash outflows include payment of bank loans of $18,000, purchase of equipment of $40,000, and payment of expenses of $73,600. The net increase in cash is calculated as ($120,000 + $44,000) - ($18,000 + $40,000 + $73,600) = $32,400.

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