Question

Dair Company's income statement and comparative balance sheets follow. DAIR COMPANY Income Statement For Year Ended December 31, 2011 Sales $ 700,000 Cost of goods sold $ 440,000 Wages and other operating expenses 95,000 Depreciation expense 21,000 Amortization expense 6,000 Interest expense 10,000 Income tax expense 36,000 Loss on bond retirement 5,000 613,000 Net income $87,000 DAIR COMPANY Balance Sheets Dec 31, 2011 Dec 31, 2010 Assets Cash $ 22,000 $18,000 Accounts receivable 54,000 48,000 Inventory 103,000 109,000 Prepaid expenses 12,000 10,000 Plant assets 360,000 336,000 Accumulated depreciation (86,000) (84,000) Intangible assets 44,000 50,000 Total assets $ 509,000 $487.000 Liabilities and Stockholders' Equity Accounts payable $ 31,000 $ 26,000 Interest payable 3.000 7,000 Income tax payable 6,000 8,000 Bonds payable 60,000 120,000 Common stock 252,000 228.000 Retained earnings 157,000 98,000 Total liabilities and equity $ 509,000 $487,000 During 2011, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. Also in 2011, new equipment worth $60,000 was acquired in exchange for $60,000 of bonds payable, and bonds payable of $120,000 were retired for cash at a loss. A $28,000 cash dividend was declared and paid in 2011. Any stock issuances were for cash.

Answer 1

	Interest Payments
	Beginning Interest Payable			$    7,000.00
Less:	Ending Interest Payable			$    3,000.00
Add:	Interest Expense			$ 10,000.00
				$ 14,000.00

	Income Tax Payments
	Beginning Income Tax Payable			$   8,000.00
Less:	Ending Income Tax Payable			$   6,000.00
Add:	Income Tax Expense			$ 36,000.00
				$ 38,000.00

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