Mayweather Reports Net Income of $305,000 for the Year Ended

question 54

Multiple Choice

Mayweather reports net income of $305,000 for the year ended December 31.It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment.Its comparative balance sheet reveals a $40,200 increase in accounts receivable,a $10,200 decrease in prepaid expenses,a $15,200 increase in accounts payable,a $12,500 decrease in wages payable,a $75,000 increase in equipment,and a $100,000 decrease in notes payable.Calculate the net increase in cash for the year.

• A)$216,400.
• B)$281,400.
• C)$381,400.
• D)$206,400.
• E)$406,400.

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Definitions:

Lockbox System

A banking service offered to businesses for collecting payments from clients, using a dedicated post office box to accelerate the process of gathering checks.

Treasury Bills

Short-term government securities with maturity periods typically less than a year, considered very safe investments.

Target Cash Balance

An optimal amount of cash that a company aims to hold to minimize costs while avoiding liquidity issues.

Average Daily Float

The average amount of uncollected funds in a company's bank account, representing checks issued but not yet cleared.