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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

ekkarill92 answered 2 years ago
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