Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Given the following information, what is the closing cash balance?
Opening cash balance $37,000
Cash flow from operations $137,500
Cash flow from financing activities $25,500
Cash flow used in investing activities $125,000
A) $24,000
B) $75,000
C) $274,000
D) $325,000

Question

Cost of the asset$100,000 
Life of the asset 5 years 
Depreciation rate20% 
Capital cost allowance rate 50% 
Residual value of the asset nil 
Income tax rate 50%
-Given the following information, what is the closing cash balance?
Opening cash balance $37,000
Cash flow from operations $137,500
Cash flow from financing activities $25,500
Cash flow used in investing activities $125,000
A) $24,000
B) $75,000
C) $274,000
D) $325,000

Quizplus · Accepted Answer

The closing cash balance is calculated by adding the opening cash balance to the cash flow from operations and cash flow from financing activities, then subtracting the cash flow used in investing activities. Therefore, $37,000 + $137,500 + $25,500 - $125,000 = $75,000.

Cost of the Asset$100,000