Answer (D) is correct . The change in Holland’s cash balance can be calculated as follows: ? Beginning cash balance $??????36,000 Add:? cash collections 1,300,000 Less:? net change in accounts payable (25,000) Less:? accrual-basis costs and expenses (1,200,000) Add:? depreciation expense (noncash) 60,000 Less:? payment for equipment (50,000) Add:? net cash received from asset sale 40,000 Less:? retirement of notes payable (66,000) Ending cash balance $??????95,000
1300000+(75000-100000)-1200000+60000-50000+35000+5000-66000+36000 = 95 000
Answer (A) is incorrect because The cash balance did change in the second quarter.
Answer (B) is incorrect because Improperly deducting rather than adding the book value of the sold asset results in $25,000.
Answer (C) is incorrect because Failing to take the book value of the sold asset into account results in $60,000 (the book value plus the gain is the cash received).
From the data above, determine Holland’s projected cash balance at the end of the second quarter.
