During 20B, Wilmont Company Performed Services for Which Customers Paid

question 98

Essay

During 20B, Wilmont Company performed services for which customers paid or promised to pay
$286,000. Of this amount, $270,000 had been collected by year end. Wilmont paid $125,000 in cash for employee wages and owed the employees $5,000 at the end of the year for work that had been done but had not paid for. Wilmont paid interest expense of $1,700 and $80,000 for other service expenses. The income tax rate was 25%, and income taxes had not yet been paid at the end of the year. Wilmont declared and paid dividends of $6,000. There were no other events that affected cash.
Required:
1. What was the amount of the increase or decrease in cash during the year?
2. Prepare an income statement for Wilmont for the year.

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Definitions:

Periodic Interest Rate

The interest rate charged or earned over a particular period of time, often expressed as a percentage.

Annual Percentage

Often referred to in context of the annual percentage rate (APR), it represents the annual rate charged for borrowing or earned through an investment.

Return Requirement

The minimum rate of return an investor expects to achieve on an investment, influencing the types of assets included in their portfolio.

Cash Flows

The aggregate money movement into and out of an enterprise, significantly impacting its cash on hand.