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Van Beeber Corporation\'s comparative balance sheet and income statement for las

ID: 2597959 • Letter: V

Question

Van Beeber Corporation's comparative balance sheet and income statement for last year appear below:

Comparative Balance Sheet

Ending Balance

Beginning Balance

Cash

$58,000

$34,000

Accounts receivable

48,000

36,000

Inventory

56,000

67,000

Prepaid Expenses

24,000

16,000

Long-term investments

280,000

220,000

Property, plant and equipment

580,000

580,000

Less accumulated depreciation

270,000

235,000

Total Assets

$776,000

$718,000

Accounts payable

$32,000

$53,000

Accrued liabilities

38,000

21,000

Income taxes payable

61,000

31,000

Bonds payable

90,000

120,000

Common Stock

80,000

60,000

Retained earnings

475,000

433,000

Total liabilities and stockholders’ equity

$776,000

$718,000

Income Statement

Sales

$700,000

Cost of goods sold

360,000

Gross margin

340,000

Selling and administrative expense

210,000

Net operating

130,000

Income taxes

39,000

Net income

$91,000

The company declared and paid $49,000 in cash dividends during the year. It did not sell or retire any property, plant, and equipment 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:

$39,000

$69,000

$9,000

$25,000

Comparative Balance Sheet

Ending Balance

Beginning Balance

Cash

$58,000

$34,000

Accounts receivable

48,000

36,000

Inventory

56,000

67,000

Prepaid Expenses

24,000

16,000

Long-term investments

280,000

220,000

Property, plant and equipment

580,000

580,000

Less accumulated depreciation

270,000

235,000

Total Assets

$776,000

$718,000

Accounts payable

$32,000

$53,000

Accrued liabilities

38,000

21,000

Income taxes payable

61,000

31,000

Bonds payable

90,000

120,000

Common Stock

80,000

60,000

Retained earnings

475,000

433,000

Total liabilities and stockholders’ equity

$776,000

$718,000

Explanation / Answer

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

Income tax paid = Beginning tax payable+Income tax expenses-ending tax payable

= 31000+39000-61000

Income tax paid = $9000

so answer is c) $9000