Question

Question 1 O out of 1.5 points On March 1 of Year 1 Wobber Enterprises paid $3,420 cash for an insurance policy that would provide protection for a one year term. The company's fiscal closing date is December 31, Bapod on this information, the amount of Prepaid Insurance appearing on the December 31 Year 1 Balance Sheet would be $ Question 2 1.5 out of 1.5 points Grey Company sold inventory that cost $3,240 for $7,031 cash. Freight cost was $480 paid in cash. The freight terms were FOB destination. Based on this information, the gross margin is $ Question 3 O out of 1.5 points Assume that Hadley Company acquires $1,873 cash from creditors and $2,000 cash from investors. If Hadley has a net loss of $830 cash and then liquidates, what amount of cash will the investors receive? Question 4 O out of 1.5 points Kate Inc. had a beginning balance of $2,152 in its Accounts Receivable account. The ending balance of Accounts Receivable was $1,484. During the period, Kate recognized $10,923 of revenue on account Based on the information provided, what is the amount of cash inflow from operating activities reported on the statemànt of cash flows?

Answer 1

Part 1) Amount of Prepaid Insurance on December 31st of Year 1 Balance Sheet

= 3420*2/12 =$570

Hence , Prepaid Insurance Amount =$570

Part 2) Calculation of Gross Margin

Gross Margin =Sale Price - Cost -Freight

Gross Margin =7031 -3240 -480 =$3311

Since Freight terms were FOB Destination , hence freight is to be borne by seller.

Part 3) Calculation of Cash to be received by Investors

Total Cash with Hadley company =1873 +2060 =3933

Net Loss =830 cash

Net Loss is to be borne by investors since in case of liquidation, creditors are to be paid first.

Cash Received by Investors = 2060-830 =$1230

Part 4)Cash Inflow from operating activities

Opening Accounts Receivable	2152
Add-Revenue on account	10923
Less- Closing Accounts Receivable	1484
Cash Inflow from Operating Activities	$11591