What does the final balance sheet look like

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Why the number of cash for Question Two is 80? sold six project at 400 each, 4 of 6 were sold in credit, 2 were sold in cash, so the cash should be 800, why the answer is 80?

1) We are in the business of buying and selling projectors, and we have just started the company. We can purchase projectors for $100 each if we are buying in bulk of 20 and can be deferred as an account payable. We have not yet made any sales. What doesthe final balance sheet look like?

Balance Sheet

a. Cash-$0
b. Inventory-$2,000
c. Accounts payable-$2,000
d. Retained earnings-$0

2) In the first period we have sold six projectors for $400 each. Four of the six sales are on credit. Assume the tax rate is 40 percent. Now what does the final balance sheet look like?

Balance Sheet

a. Cash-$80
b. Inventory-$1,400
c. Accounts receivable-$1,600
d. Accounts payable-$2,000
e. Retained earnings-$1080

3) Let's now assume we have incurred overhead costs of $1,500, of which 50 percent has been paid in cash and the rest deferred. If there is any cash shortage, we would need to raise a revolving line of credit. Now what does the final balance sheet look like?

Balance Sheet

a. Cash-$0
b. Inventory-$1,400
c. Accounts receivable-$1,600
d. Revolver-$70
e. Accrued expenses-$750
f. Accounts payable-$2,000
g. Retained earnings-$180

Reference no: EM132801951

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