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1) At the beginning of the current year,ABC Corporation had dividends payable of Rs
1) At the beginning of the current year,ABC Corporation had dividends payable of Rs. 1,600,000. During the current year, the company declared cash dividends of Rs. 4,200,000, of which Rs. 1200, 000 appeared as a liability at year-end. Determine the amount of cash dividends paid during this year.
2) ABC Company purchased an equipment for $17,000 and depreciated it for three years over a five-year estimated life with an expected residual value at the end of five years of $2,000. At the end of the third year, company decided to upgrade to the equipment with increased capacity and sold the original equipment for $10,200. Calculate the gain or loss on the disposal at the end of the third year
3) During the current year, ABC Inc., made cash sales of $275,000 and credit sales of $450,000.During the year, accounts receivable decreased by $32,000.Compute the amount of Cash received from collecting accounts receivable.for the current year.
Expert Solution
1) Computation of Amount of Cash Dividends Paid:
Amount of Cash Dividends Paid = Beginning Dividend Payable + Dividends Declared - Ending Dividend Payable
= 1,600,000 + 4,200,000 - 1,200,000
Amount of Cash Dividends Paid = 4,600,000
2) Computation of Gain or Loss on Disposal at the End of Third Year:
Annual Depreciation = (Cost-Residual value)/Useful Life
= ($17,000-$2,000)/5
= $3,000 per year
Book Value as on Date of Sale = Cost - Accumulated Depreciation
= $17,000-($3,000*3)
= $17,000 - $9,000
= $8,000
Hence since sale proceeds is greater than Book value as on date of sale;
Gain on disposal = $10,200 - $8,000 = $2,200
3) Computation of Amount of Cash Received from Collecting Accounts Receivable for the current year:
Amount of Cash Received from Collecting Accounts Receivable = Credit Sales + Decrease in Accounts Receivable
= $450,000+$32,000
Amount of Cash Received from Collecting Accounts Receivable = $482,000
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