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ollegr [7]
3 years ago
13

Based on this income statement for Company ZYX for the year ending December 31, 2014, what adjustment would need to be made to N

et Income to account for Gain or Loss in calculating cash flow from Operating Activities using the indirect method?"
COMPANY ZYX

INCOME STATEMENT

For the Year Ending 12/31/14

Net Sales $ 500,000

Cost of Sales $ 200,000

GROSS PROFIT 300,000

Operating Expenses

Research and Development 35,000

Marketing and Sales Expenses 60,000

General and Administrative Expense 21,000

TOTAL OPERATING EXPENSES 116,000

OPERATING INCOME 184,000

Gain(Loss) on sale of Equipment (30,000)

Gain (Loss) on sale of debt investment 46,000

Other Income/(Expense) (10,000)

Net INCOME BEFORE TAXES 190,000

Income Tax Expense 57,000

NET INCOME $133,000
Business
1 answer:
tresset_1 [31]3 years ago
6 0

Answer:

a) Adjustment of (16,000) in the Operating Section

Explanation:

The adjustment required in the operating activities section of the cash flow statement is shown below:

Loss of sale of equipment  $30,000

Less: Gain on sale of debt investment -$46,000

The net deduction is $16,000

Since there is a loss on sale of an equipment so the same is to be added back and there is a gain on sale of investment with respect to debt so the same is to be deducted

hence, the correct option is a.

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6 0
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Omega Custom Cabinets produces and sells custom bathroom vanities. Assume that labor is the only input that varies for the firm.
Papessa [141]

Answer:

The answer is option a). For the 11th worker, the marginal profit is $600.

Explanation:

<em>Step 1: Determine the initial profit for the 10 workers as shown;</em>

initial profit=revenue from sales-cost of labor

where;

revenue from sales=sale per unit×number of units

revenue from sales=800×20=$16,000

cost of labor=cost per unit×number of workers

cost of labor=1,000×10=$10,000

replacing;

initial profit=16,000-10,000=$6,000

<em>Step 2: Determine the final profit for the 10 workers as shown;</em>

final profit=revenue from sales-cost of labor

where;

revenue from sales=sale per unit×number of units

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cost of labor=cost per unit×number of workers

cost of labor=1,000×11=$11,000

replacing;

final profit=17,600-11,000=$6,600

<em>Step 3: Determine the marginal profit as shown;</em>

marginal profit=final profit-initial profit

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replacing;

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The marginal profit for the 11th worker=$600

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