Question

Use the information below for ABC Co. to answer the following questions.

Balance Sheet                                      December 31

2005                   2004    

Assets

Cash                                                                                                        $  20,000            $  10,000

Accounts receivable                                                                                  160,000              110,000

Inventories 80,000                50,000

Prepaid Rent                                                                                               15,000 10,000

Investments                                                                                              100,000                75,000

Plant assets                                                                                               210,000              250,000

Accumulated depreciation (65,000)             (60,000)

         Total $520,000            $445,000

Liabilities and Stockholders' Equity

Accounts payable                                                                                    $  50,000            $  40,000

Interest payable 20,000                  5,000

Income tax payable                                                                                       5,000                10,000

Note payable                                                                                             130,000              140,000

Common stock                                                                                         155,000              100,000

Retained earnings 160,000              150,000

         Total $520,000            $445,000

Income Statement

For the Year Ended December 31, 2005

Sales                                                                                                                                   $800,000

Cost of goods sold                                                                                                                480,000

Gross Profit                                                                                                                            320,000                        

Operating expenses (including Depreciation Expense) 120,000

Interest expense 20,000

Income tax expense 25,000

         Total 165,000

Income before Gains and Losses                                                                                           155,000

Gain on sale of plant assets                                                                                                      5,000   

Net income $  160,000

Additional information:

Accounts payable pertain to the purchase of inventory.

Plant assets were sold for $40,000. The cost of the plant assets was $40,000.

All dividends are cash.

For the year 2005

1. Cash paid for income taxes is:

2. Cash provided by/(used in)*operating activities is:  

3. Cash provided by/(used in)*investing activities is:  

4. Cash paid for dividends is:

5. Cash provided by/(used in)*financing activities is:

If your answer is cash “used in”, you must indicate this by writing your answer in parenthesis. For example, ($10,000). If your answer is cash “provided by”, you must write your answer without parentheses.

Refer to the balance sheet and income statement for ABC Co.:

6. If Rent Expense for the period was $20,000, the Cash paid for Prepaid Rent is:

Answer 1

					IN $
1)	CASH PAID FOR INCOME TAXES				30000
2)	CASH PROVIDED /USED BY OPERATING ACTIVITY				50000
3)	CASH PROVIDED /USED BY INVESTING ACTIVITY				15000
4)	CASH PAID FOR DIVIDEND				110000
5)	CASH PROVIDED /USED BY FINANCING ACTIVITY				-55000
6)	CASH PAID FOR PREPAID RENT				25000
CASH FLOW STATEMENT CASH FLOW FROM OPERATING ACTIVITY IN $ NET INCOME 160000 DEPRECIATION OF FIXED ASSETS 5000 GAIN ON SALE OF ASSET -5000 INCREASE IN A/C RECEIVABLE -50000 INCREASE IN INVENTORY -30000 INCREASE IN PREPAID RENT -5000 INCREASE IN ACCOUNT PAYABLE 10000 INCREASE IN INTEREST PAYABLE 15000 DECREASE IN I.TAX PAYABLE -5000 DECERASE IN NOTE PAYABLE -10000 INTEREST PAID -5000 INCOME TAX PAID -30000 CASH FOR OPERATING ACTIVITY 50000 CASH FOR INVESTING ACTIVITY SALE OF PLANT 40000 INVESTMENTS -25000 CASH FOR INVESTING ACTIVITY 15000 CASH FOR FINANCING ACTIVITY ISSUE OF COMMON STOCK 55000 DIVIDEND -110000 CASH FOR FINANCING ACTIVITY -55000 NET CASH 10000 ADD:OPENING CASH 10000 CLOSIN CASH 20000