Excerpts from Neuwirth Corporation's comparative balance sheet appear below: Ending Balance Beginning Balance Cash and cash equi
valents $ 37,000 $ 27,000 Accounts receivable $ 24,000 $ 28,000 Inventory $ 65,000 $ 68,000 Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?
1 answer:
Answer:
The change in Accounts Receivable is added to net income; The change in Inventory is added to net income.
Explanation:
Account receivable:
= Ending balance - Beginning balance
= 24,000 - 28,000
= -4,000
Decrease in account receivable
Inventory:
= Ending balance - Beginning balance
= 65,000 - 68,000
= -3,000
Decrease in inventory
Since the Current assets have decreased therefore they should be added to net income.
The change in Accounts Receivable is added to net income; The change in Inventory is added to net income.
Note: The options are missing from the question, so i have attached the options with the answer.
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The amount that Harry should pay for the investment is the present value of the net income discounted at the rate of return of 12% is equal to $270,000.
<h3>What do you mean by investment?</h3>Investment refers to the dedication of an asset to acquire growth in value over a duration of time. In finance, the motive of making an investment is to generate a return from the invested asset.
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The vacancy rate is given is 5%
The occupancy rate is 100 - 5= 95%
Now, if it is assumed that the income is earned forever, then the present value of the income will be
PV of net income = A/r
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