Question

he following questions:

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       20x1                                        20x2

Net Income $825,000 $930,000

Depreciation Expense 130,000 165,000

Inventory 1,200,000 1,640,000

Gross Fixed Assets 4,500,000 4,850,000

Dividends Paid 110,000 110,000

Accounts Receivable 700,000 810,000

Issued Common Stock 1,500,000 0

Accounts Payable 400,000 430,000

Long-Term Debt 1,100,000 1,600,000

Accruals 150,000 140,000

Net Fixed Assets 2,000,000 2,550,000

Cash 400,000 1,005,000

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QUESTION 3

1. Match the following:

   -       a.       b.       c.       d.	Operating activity
   -       a.       b.       c.       d.	Financing activity
   -       a.       b.       c.       d.	Investing activity
   -       a.       b.       c.       d.	Reconciliation

   a.	Proceeds from the sale of old machinery
   b.	Depreciation expense as a noncash item
   c.	Change in cash balance
   d.	Sale of new 30-year bonds

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Answer 1

Match the following	Answer
Proceeds from the sale of old machinery	Investing activity	proceeds of sale of old equipment is considered as part of investment activities because investment is disposed of by selling out the assets
Depreciation expense as a non cash item	Operating activity	Depreciation is added into operating income as depreciation is a non cash expense which does not involve any flow of cash
change in cash balance	reconciliation	it is done to match the year end cash balance with beginning cash balance plus net cash provided and used in a specific period
sale of new 30 year bonds	financing activity	this activity is a part of financing activity because bonds are issued to finance the capital requirement of business