Use the information below for ABC Co. to answer the following questions. Balance
ID: 2438174 • Letter: U
Question
Use the information below for ABC Co. to answer the following questions.
Balance Sheet December 31
2005 2004
Assets
Cash $ 20,000 $ 10,000
Accounts receivable 160,000 110,000
Inventories 80,000 50,000
Prepaid Rent 15,000 10,000
Investments 100,000 75,000
Plant assets 210,000 250,000
Accumulated depreciation (65,000) (60,000)
Total $520,000 $445,000
Liabilities and Stockholders' Equity
Accounts payable $ 50,000 $ 40,000
Interest payable 20,000 5,000
Income tax payable 5,000 10,000
Note payable 130,000 140,000
Common stock 155,000 100,000
Retained earnings 160,000 150,000
Total $520,000 $445,000
Income Statement
For the Year Ended December 31, 2005
Sales $800,000
Cost of goods sold 480,000
Gross Profit 320,000
Operating expenses (including Depreciation Expense) 120,000
Interest expense 20,000
Income tax expense 25,000
Total 165,000
Income before Gains and Losses 155,000
Gain on sale of plant assets 5,000
Net income $ 160,000
Additional information:
Accounts payable pertain to the purchase of inventory.
Plant assets were sold for $40,000. The cost of the plant assets was $40,000.
All dividends are cash.
For the year 2005:
1. Cash received/collected from customers is:
2. Purchases for the year is:
3. Cash paid to suppliers is:
4. Depreciation expense is:
5. Cash paid for operating expenses is:
6, Cash paid for interest is:
Explanation / Answer
Hey,
This is a kind of question which can be solved by making accounts or a table form of account(just for easy understanding and quick solution)
Items Marked bold are the answers to respective questions
1. Cash Received from customers (Account Receivable account) Particulars Amount Opening Balance 110000 Add: Sales 800000 Less: Collection 750000 Closing Balance 160000 2. Purchases (Inventory) Particulars Amount Opening Balance 50000 Add: Purchase 510000 Less: Issued for Production 480000 Closing Balance 80000 3. Cash Paid to the supplier (Account Payable Account) Particulars Amount Opening Balance 40000 Add: Purchase(above solution) 510000 Less: Cash Paid 500000 Closing Balance 50000 4. Depreciation Asset costing 40000 is sold for 40000 which apparently is sold for no gain, but Income statement suggests the gain of 5000 which means carrying a value of the asset on the date of sale was 35000. So 5000 was depreciation charged on that asset Particulars Amount Opening Balance 60000 Add: Depreciation of current year 10000 Less: Depreciation on sale of asset 5000 Closing Balance 65000 5. Cash Paid for Operating Expense Particulars Amount Expense as per income statement 120000 Less: Depreciation(Non-Cash EXPS) 10000 Cash Operating Expense 110000 6. Cash Paid for Interest( Interest Payable) Particulars Amount Opening Balance 5000 Add: Current Year Interest (from the income statement) 20000 Less: Interest Paid 5000 Closing Balance 20000Related Questions
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