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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 1-51 Relationships Among the Financial Statements

Zachary Corporation’s December 31, 2018 balance sheet included the following amounts:

Chapter 1, Problem 51E, Exercise 1-51 Relationships Among the Financial Statements Zachary Corporations December 31, 2018

Required:

Calculate the amount of cash and retained earnings at the end of 2019.

To determine

Concept Introduction:

Cash Flow statement:

The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows:

  • Operating Activities: Operating Activities are day to day business transactions, for example sales purchase etc.
  • Investing Activities: Investing Activities belong to the sale or purchase of assets or investments of a business. For example sales of fixed assets etc, purchase of investments.
  • Financing Activities: Financing Activities includes the transactions related to raising business finds through equity or debts. For example, issuance of shares and payment of dividend to shareholders.

To Calculate:

The Amount of cash and retained earnings at the end of 2019.

Explanation

The Amount of cash and retained earnings at the end of 2019 is calculated as follows:

    Zachary Corporation:
    Cash balance as on Jan. 1, 2019 $ 20,400
    Add: Cash inflows from operating activities $ 892,250
    Less: Cash outflows from investing activities $(990,300)
    Add: Cash inflows from financing activities $ 108,400
    Cash balance as on Dec...

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