Question

In: Accounting

Illies Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current...

Illies Corporation's comparative balance sheet appears below:

Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Current assets:
Cash and cash equivalents $ 45,000 $ 38,000
Accounts receivable 24,000 26,500
Inventory 72,000 74,500
Total current assets 141,000 139,000
Property, plant, and equipment 373,000 349,000
Less accumulated depreciation 166,000 137,000
Net property, plant, and equipment 207,000 212,000
Total assets $ 348,000 $ 351,000
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 23,000 $ 24,500
Accrued liabilities 59,000 64,500
Income taxes payable 54,000 47,000
Total current liabilities 136,000 136,000
Bonds payable 87,000 93,500
Total liabilities 223,000 229,500
Stockholders’ equity:
Common stock 30,500 27,000
Retained earnings 94,500 94,500
Total stockholders’ equity 125,000 121,500
Total liabilities and stockholders' equity $ 348,000 $ 351,000

The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $6,000 and its cash dividends were $6,000. The company did not issue any bonds payable or purchase any of its own common stock during the year. Its net cash provided by (used in) operating activities and net cash provided by (used in) financing activities are:

Multiple Choice

  • net cash provided by (used in) operating activities, $40,000; net cash provided by (used in) financing activities, $(9,000)

  • net cash provided by (used in) operating activities, $42,500; net cash provided by (used in) financing activities, $(3,500)

  • net cash provided by (used in) operating activities, $40,000; net cash provided by (used in) financing activities, $(3,500)

  • net cash provided by (used in) operating activities, $42,500; net cash provided by (used in) financing activities, $(9,000)

Solutions

Expert Solution

Answer: net cash provided by operating activities, $40,000; net cash (used in) financing activities, $(9,000)
Statement of Cash Flows
Particulars Amount $
Cash flows from operating activities
Net income for the year 13,000.00
Adjustments for:
Depreciation 29,000.00
Working capital changes:
(Increase) / Decrease in trade and other receivables     2,500.00
(Increase) / Decrease in prepaid insurance               -  
(Increase) / Decrease in prepaid rent               -  
(Increase) / Decrease in prepaid advertising               -  
(Increase) / Decrease in inventories     2,500.00
Increase / (Decrease) in trade payables -1,500.00
Increase / (Decrease) in income tax payable     7,000.00
Increase / (Decrease) in Accrued Liabilities -5,500.00
Cash generated from operations 47,000.00
Interest paid               -  
Income taxes paid -7,000.00
Net cash from operating activities 40,000.00
Cash flows from financing activities
Proceeds from issue of share capital     3,500.00
Dividend Paid -6,000.00
Payment of long-term borrowings -6,500.00
Net cash used in financing activities -9,000.00
Workings
property, plant and equipment A/c
Amount Amount
Opening Balance b/d 3,49,000.00
Bank A/c (balancing figure)      30,000.00
Closing Balance c/d 3,79,000.00
3,79,000.00 3,79,000.00
Accumulated Depreciation A/c
Amount Amount
Opening Balance b/d 1,37,000.00
Depreciation A/c (balancing figure)      29,000.00
Closing Balance c/d 1,66,000.00
1,66,000.00 1,66,000.00
Income Tax Payable A/c
Amount Amount
Opening Balance b/d      47,000.00
Income Tax Paid        7,000.00
Closing Balance c/d      54,000.00
     54,000.00      54,000.00
Bond Payable A/c
Amount Amount
Opening Balance b/d      93,500.00
Bank A/c ( Payment of long term borrowing)        6,500.00
Closing Balance c/d      87,000.00
     93,500.00      93,500.00
Common Stock A/c
Amount Amount
Opening Balance b/d      27,000.00
Bank A/c ( Common Stock Issued)     3,500.00
Closing Balance c/d      30,500.00
     30,500.00      30,500.00

ekkarill92 answered 2 years ago
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