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sashaice [31]
3 years ago
13

Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2] The independent cases are listed below includes all b

alance sheet accounts related to operating activities:
Case A Case B Case C
Net income $310,000 $15,000 $420,000
Depreciation expense 40,000 150,000 80,000
Accounts receivable increase (decrease) 100,000 (200,000) (20,000)
Inventory increase (decrease) (50,000) 35,000 50,000
Accounts payable increase (decrease) (50,000) 120,000 70,000
Accrued liabilities increase (decrease) 60,000 (220,000) (40,000)
Show the operating activities section of cash flows for each of the given cases. (Amounts to be deducted should be indicated with a minus sign.)
Case A Case B Case C
Net Income
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Depreciation
Changes in Assets and Liabilities
Accounts Receivable
Inventory
Accounts Payable
Accrued Liabilities
Net Cash Provided by Operating Activities
Business
1 answer:
kramer3 years ago
5 0

Answer:

The net cash flows from operating activities section of cash flows is Case A: $310,000, Case B: $230,000, Case C: $500,000.

Explanation:

Statement of cash flows (extract)  

                                            Case A      Case B      Case C

Net income                       $310,000    $15,000   $420,000

Depreciation expense         40,000    150,000       80,000

Accounts receivable         (100,000)   200,000       20,000

Inventory                               50,000    (35,000)     (50,000)

Accounts payable               (50,000)    120,000       70,000

Accrued liabilities                 60,000  (220,000)     (40,000)

Operating activities         $310,000  $230,000 $500,000

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Answer:

$800,000

Explanation:

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2010    -$4,000,000                                                            $0

2011      $1,000,000               - $4,000,000                        $3,000,000

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Now the tax paid is

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4 0
3 years ago
You are given the following information for Watson Power Co. Assume the company’s tax rate is 23 percent. Debt: 8,000 5.7 percen
____ [38]

Answer:

the company's WACC is 10.04%

Explanation:

Weighted Average Cost of Capital (WACC) is the minimum return that a project must offer before it can be accepted. It shows the risk of the company.

<em>Capital Source           Market Value        Weight           Cost Total     Weight</em>  

Debt                            $8,400,000            27.71%             4.389 %      1.22%

Common stock           $24,190,000           71.17%              12.2%         8.68%

Preferred stock           $1,400,000              4.12%               3.5%         0.14%

Total                          $ 33,990,000          100.00%                            10.04%

<u><em>Calculation of Market Value and Cost of Debt</em></u>

Market Value = 8,000×($1,000×105%) = $8,400,000

Cost of Debt = interest × (1 - tax rate)

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Market Value = 17,500× $80 = $1,400,000

Cost of Preferred stock = 3.5%

7 0
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