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3 years ago

A comparative balance sheet for Sarasota Corporation is presented as follows.

Business

1 answer:

Bond [772]3 years ago

4 0

Answer:

Sarasota Corporation

1. Statement of Cash Flows for the year ended December 31, 2020:

Operating Activities:

Net Income $129,720

Non-cash adjustment:

Depreciation 26,680

Cash from operating $ 156,400

Changes in working capital:

Accounts Receivable (15,680)

Inventory 9,320

Accounts Payable (13,320)

Net cash from operating activities $136,720

Investing Activities:

Land 39,320

Equipment (59,680)

Net cash from investing activities $(20,360)

Financing Activities:

Cash dividends $(65,680)

Net cash inflows $50,680

2. Sarasota Corporation's:

a) Current Cash Debt Coverage = Cash from operating activities/Current liabilities

= $136,720/$36,360

= 3.76

b) Cash Debt Coverage = Cash from operating activities/Total liabilities

= $136,720/$186,360

= 0.73

c) Free Cash Flow = Cash from operating activities minus Capital expenditure

= $136,720 - 59,680

= $77,040

Explanation:

a) Data and Calculations:

Sarasota Corporation

Comparative Balance Sheets

As of December 31 2020 and 2019:

Assets 2020 2019 Increase Decrease

Cash $ 72,680 $ 22,000 $50,680

Accounts receivable 84,360 68,680 15,680

Inventory 182,360 191,680 $9,320

Land 73,360 112,680 39,320

Equipment 262,360 202,680 59,680

Accumulated Depreciation-Equipment

(71,360) (44,680) 26,680

Total $603,760 $553,040

Liabilities and Stockholders' Equity

Accounts payable $ 36,360 $ 49,680 13,320

Bonds payable 150,000 200,000 50,000

Common stock ($1 par) 214,000 164,000 50,000

Retained earnings 203,400 139,360

Total $603,760 $553,040

b) The decrease in bonds is not a cash flow. The increase in Common Stock is not a cash flow. The two are exchanges. In calculating the free cash flow, the cash proceeds from sale of land were not taken into consideration because the sale was a one-off transaction and not part of the operating activities of Sarasota Corporation.

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Answer:

option (a) is correct.

Explanation:

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Whereas the accounting profits takes into the effect of explicit costs only.

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Answer:

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Explanation:

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rE = cost of equity = 20%

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Answer:

Geo

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Credit Cash $7,400

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Accounts Titles Debit Credit

Cash $728

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Accounts Titles Debit Credit

Utilities payable $728

Supplies 488

Prepaid Rent 6,100

Service Revenue $16,000

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Accounts Titles Debit Credit

Cash $488

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Accounts Titles Debit Credit

Cash $6,100

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Accounts Titles Debit Credit

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Accounts Titles Debit Credit

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Answer:

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Explanation:

The question has options. Below is the complete question.

<u>Complete Question</u>

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c. diseconomies of scale because average total cost is rising as output rises.

d. economies of scale because average total cost is falling as output rises.

The correct answer is explained below.

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3 years ago

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