Question

Alpaca Corporation had revenues of $240,000 in its first year of operations. The company has not collected on $18,700 of its sales and still owes $26,800 on $95,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $12,500 in salaries. Owners invested $13,000 in the business and $13,000 was borrowed on a five-year note. The company paid $3,700 in interest that was the amount owed for the year, and paid $7,700 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 40%. (Assume taxes are paid in the same year). Compute the cash balance at the end of the first year for Alpaca Corporation.

Answer 1

Computation of cash balonces First computation of income tax paid @you of profit Reserve (-) cost of goods (-) Salortes - Est paid - Insurou policy [for year only to be considered in PEL) - 24000 (growo) - (12:00) - (3700) - (3800) 124950 Tax paid anot. 499800 cah balonces" 221300 (68200) Cash Reverwe [ 240000 - 18700) (-) merchandise pould [groso 2680) (-) Salories (t) owner mony. (t) borrowed money in Ist paid (a) Insuranu policy poida H Taxe poud [from (12500) 13000 13000 (3700) (49.980) 105 220 Cah balonces at end of first year