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Jet001 [13]
3 years ago
7

A company borrowed $500,000 cash from a bank and used it to purchase $500,000 of new manufacturing equipment. Which of the follo

wing items would be increased by the bank loan and equipment purchase transactions?(check all that apply) A. Total Assets B. Inventory C. Cash from Financing D. Cash from Investing E. Notes Payable
Business
1 answer:
bogdanovich [222]3 years ago
5 0

Answer:

Lets see what are the double entries of borrowings and purchase of new  manufacturing equipment and their implications:

Double Entry for borrowings:

Dr Bank $500,000

Cr           Notes Payable $500,000

The above double entry shows that the total assets and Notes Payable are increased due to this transaction. Furthermore, in the Statement of Cash flow we see an increase in Cash from Financing activities and decrease in the Cash from investing activities.

The second transaction is purchase of new manufacturing equipment. It must be accounted for as under:

Dr Manufacturing Equipment $500,000

Cr                                               Bank    $500,000        

This transaction shows that net impact on the total assets is same as one asset has been increased by spending the other asset. This transaction also has no impact on Cash for financing, inventories and notes payable balances. However, their is increased negative balance in cash from investing activities.

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Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is?

Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is?

Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is?

Explanation:

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Answer:

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Explanation:

Giving the following information:

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Interest rate (i)= 7.25%

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