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How much cash does a company pay on depreciation in a givenyear?

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Hubert Koch
Hubert KochLv2
28 Sep 2019
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Related questions

1.Describe a situation that may cause manufacturing overhead tobe over-allocated in a given year. Also, describe a situation thatmay cause manufacturing overhead to be under-allocated in a givenyear.

2. Think of a business or organization that would use processcosting. What type of waste are likely to be generated during themanufacturing process? Are there ways to avoid this waste orminimize it? How might managerial accounting support the efforts toreduce waste in the production process?

Stacy Equipment Company for 20C:

  • Net income for the year 20C was $5,000.
  • Accounts receivable decreased $2,000,
  • Inventories increased $4,000
  • Accounts payable decreased $7,000.
  • Wages payable increased $1,000
  • Depreciation expense was $7,500.
  • A new service truck was purchased for $14,000.
  • Issued $30,000 common stock in exchange for a newequipment.
  • The company borrowed $18,000 on a two-year note from thebank.
  • Dividends of $7,000 were paid in cash.
  • The beginning cash balance was $10,000



1. Determine cash flows from operating activities using theindirect method

2. How much is cash flows from investing activities?

3. How much is cash flows from financing activities?

4. How much is the net change in cash account during theyear?

5. How much is the ending cash balance?

The management of Tritt Company has asked its accountingdepartment to describe the effect upon the company’s financialposition and its income statements of accounting for inventories onthe LIFO rather than the FIFO basis during 2014 and 2015. Theaccounting department is to assume that the change to LIFO wouldhave been effective on January 1, 2014, and that the initial LIFObase would have been the inventory value on December 31, 2013.Presented below are the company’s financial statements and otherdata for the years 2014 and 2015 when the FIFO method wasemployed.

Financial Position as of

12/31/13

12/31/14

12/31/15
Cash $ 91,490 $131,110 $155,320
Accounts receivable 81,540 101,260 121,910
Inventory 121,910 141,520 177,840
Other assets 161,580 171,720 201,810
Total assets $456,520 $545,610 $656,880
Accounts payable $ 41,510 $ 61,380 $ 81,540
Other liabilities 71,750 80,610 112,350
Common stock 201,810 201,810 201,810
Retained earnings 141,450 201,810 261,180
Total liabilities and equity $456,520 $545,610 $656,880

Income for Years Ended

12/31/14

12/31/15
Sales revenue $1,085,725 $1,613,560
Less: Cost of goods sold 506,900 766,700
Other expenses 205,500 305,000
712,400 1,071,700
Income before income taxes 373,325 541,860
Income taxes (40%) 149,330 216,744
Net income $223,995 $ 325,116


Other data:

1. Inventory on hand at December 31, 2013, consistedof 48,500 units valued at $3.42 each.
2. Sales (all units sold at the same price in a givenyear):
2014-158,500 units 2015-188,500 units
3. Purchases (all units purchased at the same price ingiven year):
2014-158,500 units @ $3.99 each 2015-188,500 units @ $5.02 each
4. Income taxes at the effective rate of 40% are paidon December 31 each year.


Name the account(s) presented in the financial statements thatwould have different amounts for 2015 if LIFO rather than FIFO hadbeen used, and state the new amount for each account that isnamed

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