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! | 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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