1. Tri Facts, a partnership, had revenues of $360,000 in its first year of opera

Question

1. Tri Facts, a partnership, had revenues of $360,000 in its first year of operations. The partnership has not collected on $35,000 of its sales and still owes $40,000 on $150,000 of merchandise It purchased. There was no inventory on hand at the end of the year. The partnership paid $25,000 in salaries. The partners invested $40,000 in the business and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest that was the amount owed for the year and paid $8,000 for a two-year insurance policy on the first day of business. Compute the cash balance at the end of the first year for Tri Facts.

Explanation / Answer

Particulars Amount Revenues for the first year 360000 Less: Amount not collected from customers 35000 Less: Salaries paid 25000 Less: Interest paid 3000 Less:Insurance amount paid 8000 Add: Amount Paid to creditors 40000 Add: Amount invested by partners 40000 Total Cash Balance 369000

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