Seaforce Manufacturing Inc. Income Statement Year Ended December 31, 20X5 Sale $ 340,000 Cost of goods sold $ 250,100 Gross Profit $ 89,900 Operating Expenses $ 55,000 Loss on Sale of equipment $ 2,500 $ 57,500 Profit from Operations $ 32,400 Other expenses Interest Expense $ 3,500 Profit before Income Tax $ 28,900 Income Tax Expense $ 12,000 Profit $ 16,900 Additional Information: Operating expenses include depreciation expense of $10,000 Accounts Payable related to the purchase of inventory Equipment that cost $12,500 was sold at a loss of $2,500 New equipment was purchased during the year for $8,500 Dividends declared and paid in 20X5 totaled $3,000 Common shares were sold for $12,000 cash Interest payable in 20X5 was $800 greater than interest payable in 20X4 The company uses IFRS and do not treat dividends as part of operations Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5 20X5 20X4 Cash $ 6,450 $ 4,100 Accounts Receivable $ 72,000 $ 6,500 Inventory $ 110,250 $ 140,000 Prepaid Expenses $ 1,750 $ 1,020 Equipment $ 96,000 $ 100,000 Accumulated Depreciation - equipment $ (50,000 ) $ (42,000 ) Total Assets $ 236,450 $ 209,620 Account Payable $ 16,230 $ 9,900 Interest Payable $ 810 $ 10 Income taxes payable $ 10,800 $ 9,500 Dividends Payable $ 1,800 $ 2,800 Long-term Notes Payable $ 54,500 $ 62,000 Common shares $ 135,000 $ 123,000 Retained Earnings $ 16,310 $ 2,410 Total Liabilities & Shareholders' Equity $ 236,450 $ 209,620 What is the total Cash payments for Income Taxes when the direct method is used to prepare the cash flow statement?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Seaforce Manufacturing Inc.
Income Statement
Year Ended December 31, 20X5
Sale			$	340,000
Cost of goods sold			$	250,100
Gross Profit			$	89,900
Operating Expenses	$	55,000
Loss on Sale of equipment	$	2,500	$	57,500
Profit from Operations			$	32,400
Other expenses
Interest Expense			$	3,500
Profit before Income Tax			$	28,900
Income Tax Expense			$	12,000
Profit			$	16,900

Additional Information:

Operating expenses include depreciation expense of $10,000
Accounts Payable related to the purchase of inventory
Equipment that cost $12,500 was sold at a loss of $2,500
New equipment was purchased during the year for $8,500
Dividends declared and paid in 20X5 totaled $3,000
Common shares were sold for $12,000 cash
Interest payable in 20X5 was $800 greater than interest payable in 20X4
The company uses IFRS and do not treat dividends as part of operations

Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5

	20X5	20X4
Cash	$	6,450		$	4,100
Accounts Receivable	$	72,000		$	6,500
Inventory	$	110,250		$	140,000
Prepaid Expenses	$	1,750		$	1,020
Equipment	$	96,000		$	100,000
Accumulated Depreciation - equipment	$	(50,000	)	$	(42,000	)
Total Assets	$	236,450		$	209,620

Account Payable	$	16,230		$	9,900
Interest Payable	$	810		$	10
Income taxes payable	$	10,800		$	9,500
Dividends Payable	$	1,800		$	2,800
Long-term Notes Payable	$	54,500		$	62,000
Common shares	$	135,000		$	123,000
Retained Earnings	$	16,310		$	2,410
Total Liabilities & Shareholders' Equity	$	236,450		$	209,620

What is the total Cash payments for Income Taxes when the direct method is used to prepare the cash flow statement?

Seaforce Manufacturing Inc.
Income Statement
Year Ended December 31, 20X5
Sale
Cost of goods sold
Gross Profit
Operating Expenses
Loss on Sale of equipment
Profit from Operations
Other expenses
Interest Expense
Profit before Income Tax
Income Tax Expense
Profit
Additional Information:
$55,000
$ 2,500
$340,000
$250, 100
$ 89,900
$57,500
$ 32,400
$ 3,500
$ 28,900
$ 12,000
$ 16,900
1. Operating expenses include depreciation expense of $10,000
2. Accounts Payable related to the purchase of inventory
3. Equipment that cost $12,500 was sold at a loss of $2,500
4. New equipment was purchased during the year for $8,500
5. Dividends declared and paid in 20X5 totaled $3,000
6. Common shares were sold for $12,000 cash
7. Interest payable in 20X5 was $800 greater than interest payable in 20X4
8. The company uses IFRS and do not treat dividends as part of operations
Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5

Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5
Cash
Accounts Receivable
Inventory
Prepaid Expenses
Equipment
Accumulated Depreciation - equipment
Total Assets
Account Payable
Interest Payable
Income taxes payable
Dividends Payable
Long-term Notes Payable
Common shares
Retained Earnings
Total Liabilities & Shareholders' Equity
20X5
$ 6,450
$ 72,000
$110,250
$1,750
$ 96,000
$(50,000)
$236,450
$ 16,230
$ 810
$ 10,800
$ 1,800
$ 54,500
20X4
$ 4,100
$ 6,500
$140,000
$ 1,020
$100,000
$(42,000)
$209,620
$ 9,900
$
10
$ 9,500
$ 2,800
$ 62,000
$123,000
$135,000
$ 16,310 $ 2,410
$209,620
$236,450
What is the total Cash payments for Income Taxes when the direct method is used to prepare the cash flow statement?

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