In: Accounting
Alpaca Corporation had revenues of $275,000 in its first year of
operations. The company has not collected on $19,400 of its sales
and still owes $27,500 on $98,500 of merchandise it purchased. The
company had no inventory on hand at the end of the year. The
company paid $13,200 in salaries. Owners invested $16,500 in the
business and $16,500 was borrowed on a five-year note. The company
paid $4,200 in interest that was the amount owed for the year, and
paid $8,200 for a two-year insurance policy on the first day of
business. Alpaca has an effective income tax rate of 40%. (Assume
taxes are paid in the same year).
Compute the cash balance at the end of the first year for Alpaca
Corporation.
Calculation of Income statememt | ||
Sales | 275,000 | |
Less: merchadize purchaed | (98,500) | |
Salary paid | (13,200) | |
Interest Paid | (4,200) | |
insurance expense | (4,100) | |
Total Expense | (120,000) | |
profit before tax | 155,000 | |
Less: tax expense | (62,000) | |
Net Income | 93,000 | |
Calculation of cash balance | ||
Cash collected | 255,600 | |
Paid for merchandize | (71,000) | |
Salary paid | (13,200) | |
Owner's Invested | 16,500 | |
Borrowed note | 16,500 | |
Interest Paid | (4,200) | |
Insurance Paid | (8,200) | |
Tax Payment | (62,000) | |
Net ending cash balance | 130,000 | |