Van Beeber Corporation\'s comparative balance sheet and income statement for las
ID: 2597959 • Letter: V
Question
Van Beeber Corporation's comparative balance sheet and income statement for last year appear below:
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid Expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
Total Assets
$776,000
$718,000
Accounts payable
$32,000
$53,000
Accrued liabilities
38,000
21,000
Income taxes payable
61,000
31,000
Bonds payable
90,000
120,000
Common Stock
80,000
60,000
Retained earnings
475,000
433,000
Total liabilities and stockholders’ equity
$776,000
$718,000
Income Statement
Sales
$700,000
Cost of goods sold
360,000
Gross margin
340,000
Selling and administrative expense
210,000
Net operating
130,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment during the year. The company uses the direct method to determine the net cash provided by operating activities.
On the statement of cash flows, the income tax expense adjusted to a cash basis would be:
$39,000
$69,000
$9,000
$25,000
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid Expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
Total Assets
$776,000
$718,000
Accounts payable
$32,000
$53,000
Accrued liabilities
38,000
21,000
Income taxes payable
61,000
31,000
Bonds payable
90,000
120,000
Common Stock
80,000
60,000
Retained earnings
475,000
433,000
Total liabilities and stockholders’ equity
$776,000
$718,000
Explanation / Answer
On the statement of cash flows, the income tax expense adjusted to a cash basis would be:
Income tax paid = Beginning tax payable+Income tax expenses-ending tax payable
= 31000+39000-61000
Income tax paid = $9000
so answer is c) $9000
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