Cray Cray is a merchandiser of gag gifts. The company\'s net income for the prio
ID: 2528173 • Letter: C
Question
Cray Cray is a merchandiser of gag gifts. The company's net income for the prior year was $13,200. The beginning Retained Earnings reported on the Balance Sheet was $10,000. The ending Retained Earnings reported on the Balance Sheet was $8,900. The company began the year with $18,000 in cash. Its cash flow from operating activities for the year was $12,130 The following additional transactions occurred during the year: An old piece of equipment was sold for $1,500 cash and replaced with a new piece of equipment that cost $9,450. The company made a down payment using $450 from its bank account and financed the remaining balance by taking out a cash loan with the bank. 500 shares of common stock were issued at par for a total of $1,000 in cash The Dividends Payable account balance was $0 at the beginning and the end of the year. Answer the following given the above information The company is not operating within its means O True O False The investing activities provided more cash than the investing activities used O True O False The financing activities used more cash than the financing activities provided O True O False The company's ending cash balance reported on the Balance Sheet is . (enter an absolute value)Explanation / Answer
1. True
The company is not operating within its means as the opening retained earnig is 10000 and closing retained earning is 8900. It implies that the company has made a loss of Rs. 1100.
2.False
The investing activities doesnt provide more cash than the investing activities used.
Cash Inflow from sale of old piece = 1500
Cash Outflow from purchase of new machinery = (9450)
Net outflow = 7950/-
3.True
The Financing activities provides more cash than the Financing activities used.
Cash Inflow from issue of shares = 1000
Cash Inflow from loan = 9000
Net Inflow = 10000
The company's ending cash balance :
Op cash balance = 18000
Cash flow from Operating Activities (Given) = 12130
Cash flow from Investing Activities (calculated in 2. above) = (7950)
Cash flow from Financing Activities (calculated in 3. above) = 10000
Closing Cash Balance = 32180