Use the information below for ABC Co. to answer the following questions. Balance
ID: 2438178 • 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 paid for income taxes is:
2. Cash provided by/(used in)*operating activities is:
3. Cash provided by/(used in)*investing activities is:
4. Cash paid for dividends is:
5. Cash provided by/(used in)*financing activities is:
If your answer is cash “used in”, you must indicate this by writing your answer in parenthesis. For example, ($10,000). If your answer is cash “provided by”, you must write your answer without parentheses.
Refer to the balance sheet and income statement for ABC Co.:
6. If Rent Expense for the period was $20,000, the Cash paid for Prepaid Rent is:
Explanation / Answer
IN $ 1) CASH PAID FOR INCOME TAXES 30000 2) CASH PROVIDED /USED BY OPERATING ACTIVITY 50000 3) CASH PROVIDED /USED BY INVESTING ACTIVITY 15000 4) CASH PAID FOR DIVIDEND 110000 5) CASH PROVIDED /USED BY FINANCING ACTIVITY -55000 6) CASH PAID FOR PREPAID RENT 25000 CASH FLOW STATEMENT CASH FLOW FROM OPERATING ACTIVITY IN $ NET INCOME 160000 DEPRECIATION OF FIXED ASSETS 5000 GAIN ON SALE OF ASSET -5000 INCREASE IN A/C RECEIVABLE -50000 INCREASE IN INVENTORY -30000 INCREASE IN PREPAID RENT -5000 INCREASE IN ACCOUNT PAYABLE 10000 INCREASE IN INTEREST PAYABLE 15000 DECREASE IN I.TAX PAYABLE -5000 DECERASE IN NOTE PAYABLE -10000 INTEREST PAID -5000 INCOME TAX PAID -30000 CASH FOR OPERATING ACTIVITY 50000 CASH FOR INVESTING ACTIVITY SALE OF PLANT 40000 INVESTMENTS -25000 CASH FOR INVESTING ACTIVITY 15000 CASH FOR FINANCING ACTIVITY ISSUE OF COMMON STOCK 55000 DIVIDEND -110000 CASH FOR FINANCING ACTIVITY -55000 NET CASH 10000 ADD:OPENING CASH 10000 CLOSIN CASH 20000
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