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 1 year ago

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