During 2010 the DLD Company had a net income of $50,000. In addition, selected a

Question

During 2010 the DLD Company had a net income of $50,000. In addition, selected accounts showed the following changes: Accounts Receivable $3,000 increase Accounts Payable 1,000 increase Building 4,000 decrease Depreciation Expense 1,500 increase Bonds Payable 8,000 increase What was the amount of cash provided by operating activities? A) $59,500 B) $49,500 C) $51,500 D) $50,000 Why is the answer B? Shouldn't it be $48,500? If the correct answer is not a typo, can you explain how to get $49,500 as the answer?

Explanation / Answer

A) $49,500 (50-3+1+1.5) Use the following to answer questions 5-7: The following trial balance of Reese Corp. at December 31, 2010 has been properly adjusted except for the income tax expense adjustment. Reese Corp. Trial Balance December 31, 2010 Dr. Cr. Cash $ 775,000 Accounts receivable (net) 2,695,000 Inventory 2,085,000 Property, plant, and equipment (net) 7,366,000 Accounts payable and accrued liabilities $ 1,701,000 Income taxes payable 654,000 Deferred income tax liability 85,000 Common stock 2,350,000 Additional paid-in capital 3,680,000 Retained earnings, 1/1/10 3,450,000 Net sales and other revenues 13,360,000 Costs and expenses 11,180,000 Income tax expenses 1,179,000 25,280,00 25,280,00 Other financial data for the year ended December 31, 2010: • Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly installments of $150,000. The last payment is due December 29, 2012. • The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $20,000 is classified as a current liability. • During the year, estimated tax payments of $525,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.

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