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aivan3 [116]
2 years ago
6

Nathan Herrmann has completed the basic format to be used in preparing the statement of cash flows (indirect method) for CEO Con

sultants.
Purchase of equipment $220,000
Increase in inventory 30,000
Increase in prepaid rent 10,000
Payment of dividends 40,000
Depreciation expense 20,000
Increase in accounts receivable 60,000
Increase in accounts payable 10,000
Loss on sale of land 7,000
Net income 70,000
Repayment of notes payable 50,000
Cash received from the sale of land 3,000
Issuance of common stock 250,000
Prepare the statement of cash flows for CEO Consultants using the indirect method.
Business
1 answer:
kvasek [131]2 years ago
3 0

Answer and Explanation:

The preparation of the cash flow statement is shown below:

Cash Flow From Operating Activities  

Net Income $70,000

Add: Depreciation expenses $20,000

Add: Loss on Sale of Land $7,000

Add: Increase in Accounts Payable $10,000

Less: Increase in accounts receivable -$60,000

Less: Increase in prepaid rent -$10,000

Less: Increase in inventory -$30,000

Cash Flow Provided by Operating Activities $7,000 (A)

Cash Flow From Investing Activities  

Purchase of equipment -$220,000

Cash received from the sale of land $3,000

Cash Flow Used by Investing Activities -$217,000 (B)

Cash Flow from Financing Activities  

Payment of dividends -$40,000

Repayment of notes payable -$50,000

Issuance of common stock $250,000

Cash Flow Provided by Financing Activities $160,000 (C)

Net Decrease in Cash -$50,000 (A + B + C)

Add: Cash at the beginning of the period  $95,000

Cash at the end of the period  $45,000

We considered the all three activities of the cash flow statements

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In which situation would it be most appropriate to use money you have set aside in your emergency fund?
Law Incorporation [45]

The money that has been set aside for emergency situations can be ideally used for paying the phone bill at first.

Option C is the correct answer.

<h3>What is an emergency fund?</h3>

An emergency fund is an amount that is kept by an individual out of their earned income which is further to be used in uncertain times.

An emergency fund has been created to meet the contingencies in life that can be in the form of repairs of any equipment, medical problems, loss of job, etc. This fund helps the individual in uncertain times when he/she is in need of funds.

Therefore, the phone bill should be paid first from the emergency fund then the rest of the expenses to be considered.

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3 0
1 year ago
A simple definition of curriculum?
Brilliant_brown [7]
Knowledge that is taught as part of a course of study.
5 0
3 years ago
Butler Corporation is considering the purchase of new equipment costing $84,000. The projected annual after-tax net income from
torisob [31]

Answer:

The net present value of the machine is $5530

Explanation:

Data provided in the question:

Cost of the equipment = $84,000

Annual after-tax net income from the equipment after deducting depreciation = $3,000

Depreciation = $28,000

Useful life = 3 years

Required return on investment = 9% = 0.09

Now,

After-tax cash flow = After-tax net income + Depreciation

= $3,000 + $28,000

= $31,000

Therefore,

Net Present Value = Present value of cash flow - Investment

= ( $31,000 × PVIFA(11%, 3) ) - $84,000

= ( $31,000 × 2.5313 ) - $84,000

= $78470.3 - $84,000

= -$5529.7 ≈ - $5530

hence,

The net present value of the machine is $5530

4 0
3 years ago
Read 2 more answers
New steel products has total assets of $820,470, a total asset turnover rate of 1. 39, a debt-equity ratio of 2. 8, and a return
nadya68 [22]

The firm's net income is $114,045,330.

Total Asset Turnover = Sales / Assets

or, 1.39 = Sales / $820,470

Sales = $820,470 × 1.39 = $1,140,453.3

Now,

Equity Multiplier

= Assets / Equity

= (Debt + Equity) / Equity

= (2.8 + 1) / 1

= 3.8

(Debt equity ratio has been used here)

As per Dupont Analysis,

ROE = Profit margin x Asset Turnover x Equity Multiplier

or, 0.34% = Profit Margin x 1.39 x 3.8

Profit Margin = 5.282%

Profit Margin = Net Income / Sales x 100

5.282% = Net Income / $1,140,453.3 x 100

Thus, Net Income = $114,045,330

Net income is an amount which an individual or business makes after deducting costs, taxes, and allowances. Thus, net income is what the business has left over after all its expenses.

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7 0
2 years ago
Pine Corp. produces three products, and currently has a shortage of machine hours since one of its two machines is down. The sel
yulyashka [42]

Answer:

product B

Explanation:

The computation is shown below;

<u>Particulars           Product A          Product B             Product C </u>

Selling Price            $5.00                $3.00                  $5.00

Less: Variable cost per unit ($3.50)   ($2.00)               ($2.00)

Contribution per unit     $1.50               $1.00                $3.00

Machine hours per unit   0.75                 0.25                    1

Contribution per machine hour $2.00   $4.00            $3.00

                                         ($1.50 ÷ 0.75)  ($1.00 ÷ 0.25)   ($3.00 ÷ 1)

The product B should be produced as it has the highest contribution per machine hour

6 0
3 years ago
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