Question

Xavier Company had the following transactions during the current year:
• Earned revenues of $100,000 and incurred expenses of $56,000, all in cash.
• Purchased a truck for $20,000.
• Sold land for $10,000.
• Borrowed $15,000 from a local bank.
What was the total change in cash during the year?

Answer 1

Answer: $44,000
Change in cash in operating activities:
= Revenue - expenses
= 100,000 - 56,000
= $44,000

Change in cash in Investing activities
= Sold land - Purchase of truck
= 10,000 - 25,000
= -$15,000

Change in cash from financing activities
= Borrowed $15,000 from local bank
= $15,000

Total change in cash:
= 44,000 - 15,000 + 15,000
= $44,000