The most recent balance sheet and income statement of Teramoto Corporation appea
ID: 2372860 • Letter: T
Question
The most recent balance sheet and income statement of Teramoto Corporation appears below: Comparative Balance Sheet Ending Beginning Balance Balance Assets: Cash and cash equivalents $43 $35 Accounts receivable 53 59 Inventory 73 69 Plant and equipment 582 490 Less accumulated depreciation 301 286 Total assets $450 $367 Liabilities and stockholders' equity Accounts payable $57 $48 Wages payable 21 18 Taxes payable 15 13 Bonds payable 21 20 Deferred taxes 20 21 Common stock 55 50 Retained earnings 261 197 Total liab/stock equity $450 $367 Income Statement Sales $893 Cost of good sold 587 Gross margin 306 Sell/Admin expense 189 Net operating income 117 Income taxes 35 Net Income $82 The net cash provided by (used by) financing activities for the year was A. ($18). B. $1. C. ($12). D. $5 The net cash provided by (used by) operations for the year was A. $30 B. $112 C. $117 D. $52 The net cash provided by (used by) investing activities for the year was A. $92 B. ($92). C. $77 D. ($77) Please show the work on these, I really want to understand how to work these activities out.Explanation / Answer
Hi,
Please find the answers as follows:
Part A: Net cash provided by (used by) Financing Activities for the year:
Issue of Common Stock (55-50) = 5
Payment of Dividends (197 + 82 - 261) = (18) (Calculated with the use of retained earnings and net income)
Increase in Bonds Payable (21 - 20) = 1
Net cash provided used by Financing Activities for the year = 5 - 18 +1 = -12 (Option C)
Part B: Net cash provided by (used by) operations for the year:
Net Income = 82
+ Depreciation (301 - 286) = 15
+ Decrease in Accounts Receivables ( 59-53) = 6
+ Increase in Accounts Payables (57-48) = 9
+ Increase in Wages Payables (21-18) = 3
+ Taxes Payable (15-13) = 2
- Increase in Inventory (73-69) = (4)
- Decrease in Deferred Taxes (21 -20) = (1)
Net Cash Provided by Operating Activities = 82 + 15 + 6 + 9 + 3 + 2 - 4 - 1 = 112 (Option B)
Part C: Net cash provided by (used by) investing activities for the year:
Purchase of Property Plant and Equipment (582 - 490) = (92)
Net cash provided used by Investing Activities for the year = (92)
Thanks.