Question

Illies Corporation's comparative balance sheet appears below:

Comparative Balance Sheet
	Ending Balance			Beginning Balance
Assets:
Current assets:
Cash and cash equivalents	$	58,000		$	51,000
Accounts receivable		37,000			40,800
Inventory		85,000			88,800
Total current assets		180,000			180,600
Property, plant, and equipment		412,000			375,000
Less accumulated depreciation		192,000			150,000
Net property, plant, and equipment		220,000			225,000
Total assets	$	400,000		$	405,600
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	36,000		$	38,800
Accrued liabilities		72,000			78,800
Income taxes payable		69,600			60,000
Total current liabilities		177,600			177,600
Bonds payable		100,000			113,000
Total liabilities		277,600			290,600
Stockholders’ equity:
Common stock		50,000			40,000
Retained earnings		72,400			75,000
Total stockholders’ equity		122,400			115,000
Total liabilities and stockholders' equity	$	400,000		$	405,600

The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $1,400 and its cash dividends were $4,000. The company did not issue any bonds payable or purchase any of its own common stock during the year. Its net cash provided by (used in) operating activities and net cash provided by (used in) financing activities are:

Multiple Choice

• net cash provided by (used in) operating activities, $51,000; net cash provided by (used in) financing activities, $(7,000)

• net cash provided by (used in) operating activities, $54,800; net cash provided by (used in) financing activities, $(7,000)

• net cash provided by (used in) operating activities, $54,800; net cash provided by (used in) financing activities, $(10,000)

• net cash provided by (used in) operating activities, $51,000; net cash provided by (used in) financing activities, $(10,000)

Answer 1

Answer: net cash provided by (used in) operating activities, $51,000; net cash provided by (used in) financing activities, $(7,000)

Calculations:

Cash flows from Operating Activities:
Net income		$1,400
Adjustments:
Depreciation expense (192,000-150,000)	$42,000
Decrease in accounts receivable	$3,800
Decrease in inventory	$3,800
Decrease in accounts payable	($2,800)
Decrease in accrued liabilities	($6,800)
Increase in income tax payable	$9,600	$49,600
Net cash provided by (used in) operating activities		$51,000
Cash flows from Financing Activities:
Payment of bonds payable (113,000-100,000)	($13,000)
Issuance of common stock (50,000-40,000)	$10,000
Paid for cash dividends	($4,000)
Net cash provided by (used in) financing activities		($7,000)