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Question & Answer: Alpaca Corporation had revenues of $305,000 in its first year of operations. The c…..

Alpaca Corporation had revenues of $305,000 in its first year of operations. The company has not collected on $20,000 of its sales and still owes $28,100 on $96,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,800 in salaries. Owners invested $19,500 in the business and $19,500 was borrowed on a five-year note. The company paid $4,700 in interest that was the amount owed for the year, and paid $8,700 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 32%. Compute the cash balance at the end of the first year for Alpaca Corporation O $168,992 O $221,835 o $ 200,835 o $ 189,835

Alpaca Corporation had revenues of $305,000 in its first year of operations. The company has not collected on $20,000 of its sales and still owes $28, 100 on $96, 500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13, 800 in salaries. Owners invested $19, 500 in the business and $19, 500 was borrowed on a five-year note. The company paid $4, 700 in interest that was the amount owed for the year, and paid $8, 700 for a two-year insurance policy on the first day of business. Alpaca has an effective income tax rate of 32%. Compute the cash balance at the end of the first year for Alpaca Corporation $168, 992 $221, 835 $ 200, 835 $ 189, 835

Expert Answer

 

DESCRIPTION AMOUNT
OWNERS INVESTMENT $19500
5 YEAR NOTE $19500
SALARIES PAID ($13800)
INTEREST PAID ($4700)
CASH COLLECTED FROM REVENUE ($305000 – $20000) $285000
PAYMENT FOR MERCHANDISE ($96500 – $28100) ($68400)
PAYMENT FOR INSURANCE POLICY ($8700)
PAYMENT FOR INCOME TAX ($185650 * 32%) ($59408)
CASH BALANCE AT END $168992
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