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Leatherwood Corporation

Price: $4.99


The Leatherwood Corporation comparative balance sheets for Year 1
and year 2 are as follows selected data:

Assets  Year 1   Year 2 
Cash  -    (50,000)
Accounts receivables  50,000  100,000
Inventory  200,000  250,000
Equipment (net)  300,000  350,000
Total Assets  550,000  650,000
Liabilities and Equity
Accounts payable  150,000  100,000
Income taxes payable  80,000  30,000
Bonds payable  100,000  80,000
Common stock  100,000  200,000
Retained earnings  120,000  240,000
Total liabilities and equity  550,000  650,000

A brief income statement for Year 2 shows the following:

Sales  900,000
Cost of goods sold  500,000
Operating expenses  100,000
Depreciation  50,000
Income tax expense  100,000  (750,000)
Net income  150,000

1. How much cash did Leatherwood collect from customers during Year 2?
a. $150,000
b. $750,000
c. $850,000
d. $900,000

2. How much cash did Leatherwood pay to suppliers for inventory during Year 2?
a. $150,000
b. $400,000
c. $500,000
d. $600,000

3. How much did Leatherwood pay in dividends to shareholders in Year 2?
a. $ 30,000
b. $ 120,000
c. $ 150,000
d. $ 330,000

4. How much did Leatherwood pay in income taxes to the government in Year 2?
a. $ 30,000
b. $ 80,000
c. $ 110,000
d. $ 150,000

5. What are Leatherwood’s cash flows from operating activities for Year 2?
a. $ 0
b. $ 50,000 outflow
c. $ 150,000 outflow
d. $ 400,000 inflow

6. What are Leatherwood’s cash flows from investing activities for Year 2?
a. $ 0
b. $ 100,000 inflow
c. $ 100,000 outflow
d. $ 350,000 outflow

7. What are Leatherwood’s cash flows from financing activities for Year 2?
a. $ 0
b. $ 50,000 inflow
c. $ 50,000 outflow
d. $ 150,000 outflow

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