FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Required information E12-13 (Algo) (Supplement B) Computing and Reporting Cash Flow Effects of Sale of Plant and Equipment [The following information applies to the questions displayed below.] During two recent years, Perez Construction, Inc., disposed of the following plant and equipment: Year 1 $ 76,200 Plant and equipment (at cost) Accumulated depreciation on equipment disposed of Cash received Gain (loss) on sale E12-13 Part 1 42,785 20,264 (13, 151) Year 2 $15,900 4,973 14,563 3,636 Required: 1. Determine the cash flow from the sale of property for each year that would be reported in the investing activities section of the cash flow statement. (List cash outflows as negative amounts.)arrow_forwardA machine with a cost of $138,000 and accumulated depreciation of $93,000 is sold for $54,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is: Multiple Choice $54,000. $9,000. $45,000. Zero. This is a financing activity. Zero. This is an operating activity.arrow_forwardSweeter Enterprises Inc. has net cash flows from operating activities of $378,000. Cash flows used for investments in property, plant, and equipment totaled $76,000, of which 65% of this investment was used to replace existing capacity. a. Determine the free cash flow for Sweeter Enterprises Inc. b. How might a lender use free cash flow to determine whether or not to give Sweeter Enterprises Inc. a loan? Free cash flow is often used to measure the financial strength of a business. The - free cash flow that a business has, the easier it will be for the company to pay the interest on the loan and repay the loan principal. Sweeter's free cash flow is $ which is veryarrow_forward
- TJ Industries has revenue of $400,000 and expenses of $250,000. The depreciation cost is $80,000 and marginal tax rate is 35%. Calculate cash flow from operation. Group of answer choices a.$150,000 b.$45,500 c.$125, 500 d.$135,000arrow_forwardHampton Industries had $44,000 in cash at year-end 2020 and $27,000 in cash at year-end 2021. The firm invested in property, plant, and equipment totaling $170,000 - the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$150,000. Round your answers to the nearest dollar, if necessary. a. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign. b. If accruals increased by $50,000, receivables and inventories increased by $125,000, and depreciation and amortization totaled $73,000, what was the firm's net income?arrow_forwardanswer in text form please (without image)arrow_forward
- The capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows: Warehouse Tracking Technology Year Income fromOperations Net CashFlow Income fromOperations Net CashFlow 1 $44,000 $145,000 $92,000 $232,000 2 44,000 145,000 70,000 196,000 3 44,000 145,000 35,000 138,000 4 44,000 145,000 15,000 94,000 5 44,000 145,000 8,000 65,000 Total $220,000 $725,000 $220,000 $725,000 Each project requires an investment of $440,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 10% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683…arrow_forwardThe capital investment committee of Ellis Transport and Storage Inc. is considering two investment projects. The estimated income from operations and net cash flows from each investment are as follows:arrow_forwardGomez is considering a $235,000 Investment with the following net cash flows. Gomez requires a 12% return on its Investments. (PV of $1, FV of $1. PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Net cash flows Year 1 $72,000 Year 2 $49,000 Year 3 Year 4 $90,000 $129,000 Year 5 $51,000 (a) Compute the net present value of this Investment. (b) Should Gomez accept the Investment? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of this investment. Note: Round your answers to the nearest whole dollar. Net Cash Year Flows Present Value of 1 at 12% Present Value of Net Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Totals Initial investment Net present valuearrow_forward
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