Tennison Corporation had the following transactions in its first year of operati

Question

Tennison Corporation had the following transactions in its first year of operations:
  

What is the cash balance at year end?

$240,000.

$260,000.

$288,000.

$370,000.

Sales (80% collected in year) $ 1,950,000 Bad debt write-offs 72,000 Disbursements for costs and expenses 1,320,000 Disbursements for income taxes 102,000 Purchases of fixed assets 520,000 Depreciation of fixed assets 92,000 Proceeds from issuance of common stock 620,000 Proceeds from short-term borrowings 112,000 Payments on short-tern borrowings 62,000

Explanation / Answer

Inflows

= Sales x 80% + Proceeds from issuance of common stock + Proceeds from short-term borrowings

= $ 1,950,000 x 80% + $ 620,000 + $ 112,000

= $ 2,292,000

Outflows

= Disbursements for costs and expenses + Disbursements for income taxes + Purchases of fixed assets + Payments on short-term borrowings

= $ 1,320,000 + $ 102,000 + $ 520,000 + $62,000

= $ 2,004,000

So, Cash balance at year end

= Inflows – Outflows

= $ 2,292,000 - $ 2,004,000

= $288,000

So, option C is the correct option

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