To calculate how much cash was received by Dara Company in 2025, we need to analyze the changes in various accounts and items from their income statement and balance sheets for both December 31, 2025, and December 31, 2024. Let’s break down the information step by step.
Interest Revenue: The income statement states that Dara Company earned $150,000 in interest revenue in 2025. This represents income that was recognized but may not necessarily have been received in cash.
Interest Receivable: Looking at the balance sheets, we see that Interest Receivable increased from $13,000 on December 31, 2024, to $19,000 on December 31, 2025. This indicates that $6,000 of interest revenue was earned in 2024 but was received in cash in 2025 ($19,000 – $13,000).
Salaries and Wages Expense: The income statement shows that Salaries and Wages Expense amounted to $190,000 in 2025, representing the total salaries and wages incurred during the year. However, we need to consider changes in Salaries and Wages Payable to determine how much cash was paid.
Salaries and Wages Payable: From the balance sheets, we observe that Salaries and Wages Payable increased from $7,000 on December 31, 2024, to $18,900 on December 31, 2025. This indicates that $11,900 of salaries and wages expense incurred in 2025 were paid in cash in 2025 ($18,900 – $7,000).
Insurance Expense: The income statement reports that Insurance Expense was $25,300 in 2025, representing the total insurance cost for the year. However, we need to consider changes in the Prepaid Insurance account to determine how much cash was paid.
Prepaid Insurance: From the balance sheets, we can see that Prepaid Insurance decreased from $5,000 on December 31, 2024, to $3,200 on December 31, 2025. This indicates that $1,800 of insurance expense incurred in 2025 was paid in cash ($5,000 – $3,200).
Now, let’s sum up the cash received by Dara Company in 2025:
Interest Receivable increase: $6,000
Salaries and Wages Payable increase: $11,900
Prepaid Insurance decrease: $1,800
To find the total cash received, we add these amounts together:
$6,000 (Interest) + $11,900 (Salaries and Wages) + $1,800 (Insurance) = $19,700
Therefore, Dara Company received $19,700 in cash during 2025, considering the changes in these specific accounts. This amount represents the cash flow related to the items mentioned in the income statement and balance sheets. It’s important to note that this calculation focuses on these specific items, and there may be other cash flows not considered here, such as operating and investing activities.
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