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Reil [10]
3 years ago
15

Cheyenne Corp. had the following transactions that took place during the year:I.Recorded credit sales of $2250II.Collected $1350

from customersIII.Recorded sales returns of $450 and credited the customer's account.What is the total effect of these transactions on free cash flow?a) No Effectb) Cannot be determinedc) Increased) Decrease
Business
1 answer:
Degger [83]3 years ago
7 0

Answer:

The correct option is d) <u>Decrease</u>.

Explanation:

Free cash flow (FCF) can be described as the cash that is generated by a company after cash outflows required to support operations and maintain the capital assets of the company have been accounted for.

Therefore, FCF can be calculated by adjusting for non-cash expenses, changes in working capital, and capital expenditures to reconcile net income.

The total effect of these transactions on free cash flow can be determined by first calculating the account receivable for the year as follows:

Calculation of account receivable for the year:

<u>Particular                                                     Amount ($)</u>

Credit sales                                                    2,250

Cash collected from the customer              (1,350)

Sales returns                                                <u>   (450)  </u>

Account receivable                                     <u>    450  </u>

A partial free cash flow statement can therefore be prepared as follows:

Cheyenne Corp.

Free cash flow statement (Partial)

<u>Particular                                                                   Amount ($)  </u>

Net income                                                                         xx

(Increase) decrease in non-cash current assets:

Increase in account receivable                                    <u>   (450)  </u>

Free cash flow                                                              <u>   (450)   </u>

<u />

Since the free cash flow is negative or minus $450, it therefore implies that the total effect of these transactions on free cash flow is a <u>decrease</u>.

Therefore, the correct option is d) <u>Decrease</u>.

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Dave and his friend Stewart each owns 50 percent of KBS. During the year, Dave receives $75,000
qaws [65]

Answer: $12717

Explanation:

1. The amount of FICA and/or self-employment tax that Dave is required to pay on his compensation and his

share of the KBS income if KBS is formed as a C corporation, will be:

= 7.65% × $75000

= 7.65/100 × $75000

= 0.0765 × $75000

= $5738

2. As an S Corporation will be:

= 7.65% × $75000

= 7.65/100 × $75000

= 0.0765 × $75000

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3. As a limited liability company will be:

Dave's compensation = 75,000

Dave's portion of income will be calculated as:

= 50% × $30,000

= 0.5 × $30,000

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Total will then be:

= $75000 + $15000 = $90000

We then calculate the net earnings which will be:

= 92.35% × $90000

= 0.9235 × $90000

= $83115

The FICA and/or self-employment tax that Dave is required to pay will then be:

= 15.3% × $83115

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8 0
2 years ago
Suppose country X partially specializes in the production of only two goods, food and clothing. At the initial free trade equili
alekssr [168]

If food consumption should rise by 42 units we can conclude that country X’s willingness to trade declines.

<h3>The reason why the willingness to trade would decline</h3>

The willingness to trade for this country would be on a decline given the fact that X's countyry is on a balanced growth path and the prices of their goods are unchanged in the international market.

Due to the lack of change they would not want to engage in trade again with other countries.

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2 years ago
Compared with a career , a job ?
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3 years ago
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There are only three stocks in the economy. Stock A has 20 shares outstanding and a price per share of $10. Stock B has 15 share
gregori [183]

Answer:

Market value of stock A = 20 shares x $10 = $200

Market value of stock B = 15 shares x $3   = $45

Market value of stock C = 10 shares x $5   = $50

Total market value                                          $295

Amount to invest in stock A

= $200/$295 x $5,000

= $3,389.83

Explanation:

In this case, we will calculate the market value of each stock by multiplying the number of each stock by their corresponding market prices.

Thereafter, we will divide the market value of stock A by the total market value multiplied by amount available for investment ($5,000).

7 0
3 years ago
the graph to the right depicts the per unit cost curves and demand curve facing a shirt manufacturer in a competitive industry 2
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The firm will exit or leave the industry as its not making any profits.

<h3><u>CALCULATION OF THE PROFITS</u></h3>

According to the Question,

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=( 4.78 - 6.76 ) × 55

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As the firm in the industry is making losses ( a negative profit ) so it  will exit the industry in the long run.

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