there were no sales or retirements of plant and equipment during the year dividends 641403

The comparative balance sheets for Rayco, Inc., are presented below:

Don't use plagiarized sources. Get Your Custom Essay on there were no sales or retirements of plant and equipment during the year dividends 641403 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Order Essay	Ending	Beginning
Cash	$ 20,000	$ 15,000
Accounts receivable (net)	27,000	25,000
Inventory	32,000	35,000
Prepaid expenses	8,000	5,000
Long term investments	36,000	38,000
Plant and equipment	108,000	92,000
Accumulated depreciation	(49,000)	(30,000)
Total assets	$182,000	$180,000
Accounts payable	$ 30,000	$ 38,000
Notes payable	40,000	32,000
Deferred income taxes	17,000	35,000
Common stock	45,000	40,000
Retained earnings	50,000	35,000
Total liabilities and stock holders equity	$182,000	$180,000

Rayco, Inc., reported the following net income for the year:

Sales	$200,000
Less cost of goods sold	100,000
Gross margin	100,000
Less operating expenses	52,000
Net operating income	48,000
Gain on sale of investments	2,000
Income before taxes	50,000
Less income taxes	20,000
Net income	$ 30,000

There were no sales or retirements of plant and equipment during the year. Dividends paid to shareholders totaled $15,000. The company uses the direct method for determining the net cash provided by operating activities on its statement of cash flows.

1 Using the direct method, sales adjusted to the cash basis would be:

A) $202,000

B) $198,000

C) $200,000

D) $210,000

2. Using the direct method, cost of goods sold adjusted to the cash basis would be:

A) $95,000

B) $100,000

C) $105,000

D) $108,000

3. The income tax expense adjusted to the cash basis would be:

A) $18,000

B) $2,000

C) $20,000

D) $38,000

4. The net cash provided by operating activities would be:

A) $37,000

B) $39,000

C) $30,000

D) $19,000

5. The net cash provided by financing activities would be:

A) $(2,000)

B) $(10,000)

C) $(15,000)

D) $5,000

6. The net cash provided by investing activities would be:

A) $(4,000)

B) $(12,000)

C) $(16,000)

D) $4,000

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