Question

Brief Exercise 4-16 Determine investing cash flows (LO4-7) On January 12, Ferrell Incorporated obtains a permit to start a comedy club, which will operate only on Saturday nights. To prepare the club for the grand opening, Ferrell purchases tables and chairs for $11,600 on January 16. Ferrell also purchases cleaning supplies on account for an additional $3,800. Determine the amount of investing cash flows Ferrell would report in January. Total investing cash flows

Answer 1

Total Investing cash flows = 11600 dollars

Above answer is explained below in detail:

Ferrell purcahses tables and chairs on January 16 for 11600 dollars. It was recorded in January cash flows. But purcahses on account is not considered in January cash flows because we are not paying the cash yet. Therefore it is an accounts payable which is not paid yet. Hence we need not to consider purchases on account as cash flow in January.

Therefore the total cash flows invested in January is reported as 11600 dollars.

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