Presented below are the 2013 income statement and comparative balance sheets for
ID: 2352234 • Letter: P
Question
Presented below are the 2013 income statement and comparative balance sheets for Santana Industries.SANTANA INDUSTRIES
Income Statement
For the Year Ended December 31, 2013
($ in thousands)
Sales revenue $ 14,250
Service revenue 3,400
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Total revenue $ 17,650
Operating expenses:
Cost of goods sold 7,200
Selling 2,400
General and administrative 1,500
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Total operating expenses 11,100
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Operating income 6,550
Interest expense 200
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Income before income taxes 6,350
Income tax expense 2,500
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Net income $ 3,850
________________________________________________________________________________ ________________________________________________________________________________
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Balance Sheet Information ($ in thousands) Dec. 31,
2013 Dec. 31,
2012
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Assets:
Cash $ 7,350 $ 2,200
Accounts receivable 2,500 2,200
Inventory 4,000 3,000
Prepaid rent 150 300
Plant and equipment 14,500 12,000
Less: Accumulated depreciation (5,100 ) (4,500 )
________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________
Total assets $ 23,400 $ 15,200
________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________
Liabilities and Shareholders
Explanation / Answer
Statement of cash flows (indirect method)
Cash flows from operating activities
Net income
3,850
adjustments to net income
depreciation
1,600
Increase in accounts receivable
-300
Increase in inventory
-1,000
Decreased in prepaid rent
150
Increase in accounts payable
300
Increase in interest payable
100
Increase in unearned revenue
200
Decrease in income tax payable
-250
Increase in loan payable
5,000
net cash provided by operating activities
9,650
Cash flows from investing activities
Purchase of equipment
-4,000
Sale of equipment
500
net cash provided by investing activities
-3,500
Cash flows from financing activities
payment of dividend
-1,000
net cash provided by financing activities
-1,000
net increase in cash
5,150
Cash balance, beginning
2,200
cash balance, ending
7,350
Statement of cash flows (indirect method)
Cash flows from operating activities
Net income
3,850
adjustments to net income
depreciation
1,600
Increase in accounts receivable
-300
Increase in inventory
-1,000
Decreased in prepaid rent
150
Increase in accounts payable
300
Increase in interest payable
100
Increase in unearned revenue
200
Decrease in income tax payable
-250
Increase in loan payable
5,000
net cash provided by operating activities
9,650
Cash flows from investing activities
Purchase of equipment
-4,000
Sale of equipment
500
net cash provided by investing activities
-3,500
Cash flows from financing activities
payment of dividend
-1,000
net cash provided by financing activities
-1,000
net increase in cash
5,150
Cash balance, beginning
2,200
cash balance, ending
7,350
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