Question
In: Accounting
In Year One, the Karsenti Company reported net income of $30,000. Among many other accounts, the...
In Year One, the Karsenti Company reported net income of $30,000. Among many other accounts, the income statement included sales revenue of $500,000, cost of goods sold of $300,000, depreciation expense-quipment of $50,000, and again on the sale of equipment of $23,000. Included on the balance sheet were a number of accounts such as bonds payable (increased $23,000), accounts payable (decreased $6,000), retained earnings (increased $11,000), equipment (decreased $70,000), accumulated depreciation-equipment (increased $29,000), accounts Receivable (decreased $17,000) and inventory (increased $3,000). No capital stock was issued or reacquired during the year.
A. How much cash did this company spend on inventory during the year?
A. $291,000
B. $297,000
C. $303,000
D. $309,000
B. Using the indirect method, how much cash did Karsenti generate this year from its operating activities?
A. $57,000
B. $65,000
C. $69,000
D. $71,000
Solutions
Expert Solution
| 1.cost of goods sold-B | 3,00,000 |
| inventory (increased) | 3,000 |
| Purchases | 3,03,000 |
| accounts payable (decreased) | 6000 |
| Cash Paid for purchases | 3,09,000 |
2.
| Net income | 19,000 |
| Adjustments: | |
| depreciation expense-Equipment | 50,000 |
| Profit/Loss on sale of equipment | -6,000 |
| Other Adjustments | |
| bonds payable (increased) | |
| accounts payable (decreased) | -6,000 |
| accounts Receivable (decreased) | 17,000 |
| inventory (increased) | -3,000 |
| 71,000 |
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