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Question(s) / Instruction(s):

Van Brun Company’s comparative balance sheet and income statement for last year appear below:

 

 

 

Statement of Financial Position

 

 

 

 

Ending

Beginning

 

 

Balance

Balance

 

Cash

$56,000

$31,000

 

Accounts Receivable

$27,000

$42,000

 

Inventory

$69,000

$60,000

 

Prepaid Expenses

$14,000

$19,000

 

Long-term investments

$260,000

$180,000

 

Plant and equipment

$410,000

$410,000

 

Accumulated depreciation

$566,000

$507,000

 

 

 

 

 

Accounts payable

$28,000

$46,000

 

Accrued liabilities

$31,000

$17,000

 

Taxes payable

$17,000

$20,000

 

Bonds payable

$140,000

$190,000

 

Deferred taxes

$31,000

$19,000

 

Common stock

$90,000

$60,000

 

Retained earnings

$229,000

$155,000

 

Total liabilities and owners’ equity

$566,000

$507,000

 

                        Income Statement

 

Sales                                        $850,000

Less Cost of goods sold                       $390,000

Gross margin                           $460,000

Less Operating expense                       $280,000

Net operating income               $180,000

Less income taxes                    $54,000

Net Income                              $126,000

 

The company declared and paid $52,000 in cash dividends during the year. The company uses the direct method to determine the net cash provided by operating activities.

 

On the statement of cash flows, the income tax expense adjusted to a cash basis would be:

A) $63,000

B) $57,000

C) $45,000

D) $54,000

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