Answer:
B.) right to simplicity
Explanation:
:)
The right to simplicity is basically one which is not recognized as one of the eight consumer rights. Thus option (b) is correct.
What are the consumer rights?Consumer rights are a set of rights and protections that are afforded to consumers when they engage in economic transactions with businesses or service providers.
These rights are designed to ensure that consumers are treated fairly and have access to the information and resources they need to make informed decisions.
These rights are often enshrined in consumer protection laws and regulations, and are enforced by government agencies and consumer advocacy organizations. By using these individuals can protect themselves from fraud, deception, and unfair business practices.
The right to simplicity is not included in the eight recognized consumer rights. Therefore, option (b) is correct.
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Your company will generate $74,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.25 percent, what is the present value of the savings
Answer:
$395,354.84
Explanation:
Present value = Payment of yearly revenue * [(1-interest rate)^n )/ Interest rate]
Present value = $74,000 * [(1-1/(1+0.0725)^7 / 0.0725]
Present value = $74,000 * 5.34263299822737
Present value = $395354.8418688254
Present value = $395,354.84
Therefore, the present value is $395,354.84
what is Equity financing
As a professional engineer originally licensed 30 years ago, you are asked to evaluate a newly developed computerized control system for a public transportation system. You may accept this project if:
Answer:
He or she is competent in the area of modern control systems
Explanation:
In the given scenario an engineer that has been licensed 30 years ago is asked to evaluate a newly developed computerized control system for a public transportation system.
The one major concern here is if the engineer's knowledge is not obsolete considering modern technological know how is required for this project.
There is constant update on engineering skill as time goes by.
So the main consideration before he takes on the project is that is he competent in the area of modern control systems
Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the asset. Maintenance and repairs are charged to expense as incurred. Assume that FedEx made extensive repairs on an existing building and added a new wing. The building is a garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost $720,000, and by the end of 2010 (10 years), it was half depreciated on the basis of a 20-year estimated useful life and no residual value. Assume straight-line depreciation was used. During 2011, the following expenditures related to the building were made:
a. Ordinary repairs and maintenance expenditures for the year, $7,000 cash.
b. Extensive and major repairs to the roof of the building, $122,000 cash. These repairs were completed on December 31, 2011.
c. The new wing was completed on December 31, 2011, at a cash cost of $230,000.
Required:
a. Applying the policies of Commonwealth Delivery, complete the following, indicating the effects for the preceding expenditures. Indicate the effects positive value for increase, negative value for decrease.
Building Accumulated Depreciation Depreciation Expense Repairs Expense Cash
Balance January 1, 2011 $720,000 $360,000
Depreciation for 2011
Balance prior to expenditures 720,000
Expenditure (a)
Expenditure (b)
Expenditure (c)
Balance December 31, 2011
b. What was the book value of the building on December 31, 2011?
c. Explain the effect of depreciation on cash flows.
Answer:
FedEx
a.
Building Accumulated Depreciation Repairs Cash
Depreciation Expense Expense
Balance, January 1,
2011 $720,000 $360,000
Depreciation for 2011 36,000 $36,000
Balance prior to
expenditures 720,000
Expenditure (a) $7,000 $7,000
Expenditure (b) 122,000 122,000
Expenditure (c) 230,000 230,000
Balance December 31,
2011 $1,072,000 $396,000 $36,000 $7,000 $249,000
b. The book value of the building on December 31, 2011 was $1,072,000.
c. Depreciation does not have any effect on cash flows. It is a charge on the income used to record the cost of the use of the asset in the current period. It is a kind of cost allocation, whereby the cost of an asset is recorded in the periodic financial statement in recognition of the use of that asset to generate income for the period.
Explanation:
a) Data and Calculations:
Original cost of building = $720,000
Depreciated value of building = $36,000
Remaining useful life = 10 years
Repairs and maintenance expenses = $7,000
Extensive and major repairs to the building roof = $122,000
Cash cost of New wing = $230,000
Building Accumulated Depreciation Repairs Cash
Depreciation Expense Expense
Balance, January 1,
2011 $720,000 $360,000
Depreciation for 2011 36,000 $36,000
Balance prior to
expenditures 720,000
Expenditure (a) $7,000 $7,000
Expenditure (b) 122,000 122,000
Expenditure (c) 230,000 230,000
Balance December 31,
2011 $1,072,000 36,000 $36,000 $7,000 $249,000
A public relations specialist earns $41,500 salary each year. He/she wants to spend no more than three times his/her salary on a house. What is the maximum price of a home that he/she can afford
Answer:
Maximum price= $124,500
Explanation:
Giving the following information:
Annual salary= $41,500
He/she wants to spend no more than three times his/her salary on a house.
To calculate the maximum price that he/she is willing to pay, we need to use the following formula:
Maximum price= 41,500*3
Maximum price= $124,500
Answer:
$3,750
Explanation:
Hope it helps! :)
Although the cost-plus method approach to product pricing may be used by management as a general guidance, when are some examples of other factors that managers should also consider in setting product prices?
Answer: value-based pricing.
Explanation:
Value-based pricing, in its literal sense, means basing pricing on the benefits of the commodity perceived by the customer rather than on the exact cost of making the product. For example, a painting may be priced much higher than canvas and painting prices: in fact, the price depends a lot on who the painter is.
In Metallgesellschaft's Hedging Debacle the company arranged long term forward contracts to sell oil/energy. Their hedge was to sell short-term futures contracts and roll into new months(called a stacked hedge). The hedge turned out poorly for MG because the stacked hedge works when markets are in backwardation and the basis risk resulted in negative profit between the selling the futures and delivering in the forwards. What is true about the activities of Metallgesellschaft's hedging
I. sources of risk were basis risk and liquidity risk
II. losses on the short term futures contracts hedge would not be covered by the long term forwards
III. the stacked hedge works when markets are in contango
IV. Metallgesellschaft used a 1 to 1 hedge when they should have used an optimal hedge ratio
a. I, II, III, IV
b. I, II, IV
c. I, III
d. I, III, IV
Answer:
The truth about the activities of Metallgesellscraft's hedging was:
b. I, II, IV.
Explanation:
Hedging financial risks involve the strategic use of financial instruments to offset the risk of any adverse price movements. Hedging provides security traders and investors the means to mitigate market risk and volatility and minimize future financial loss. The stacked hedge, in which the most nearby and liquid contract is used and then rolled over to the next-to-nearest contract as time passes, works when the markets are in backwardation (lower forward price than the spot price) and not in contango (higher forward price than the spot price).
Shelby Cabinets, Inc. produces custom cabinets. The following inventory balances appeared on its balance sheet.
12/31/2012
12/31/2011
Raw materials inventory
$ 8,000
$ 10,000
Work-in-process inventory
600,000
550,000
Finished goods inventory
350,000
410,000
Shelby Cabinets had $1,265,000 in sales for the year ended December 31, 2012. The company also had the following costs for the year:
Selling
$ 90,000
General and administrative
$240,000
Raw materials purchases
$100,000
Direct labor used in production
$125,000
Manufacturing overhead
$630,000
Of the total raw materials placed in production for the year, $12,000 was for indirect materials and must be deducted to find direct materials placed in production.
Using the above information, what was Shelby’s Cost of Goods Manufactured?
(Hint: You must first calculate Direct materials placed in production before calculating the Cost of Goods Manufactured.)
Group of answer choices
$795,000
$845,000
$855,000
$1,395,000
Answer:
$855,000 yippie!!!
A firm has market power if it can a. maximize profits. b. minimize costs. c. influence the market price of the good it sells. d. hire as many workers as it needs at the prevailing wage rate.
Answer:
Option C: Influence the market price of the good as it sells
Explanation:
Market Power is simply when a firm is able to raise price above the equilibrium level by not and without losing all of its customers. It depends on largely on the closeness of substiutes.
A firm has market power if it can Influence the market price of the good as it sells to its customer and can regulate it when necessary.
Asking an employee if there is anything that you can do to make it easier to work together
Answer:
Communicate, every day, every way
Good communication is at the heart of great teamwork. Great teams communicate well and often, their members are happy to share ideas, brainstorm together, ask for feedback, and be contradicted.
Explanation:
Hope this helps:)
Weng CPAs charges for their services based on the following: Labor rate $ 171 per hour Materials markup 30 % Using time and materials pricing, what is the total price for services requiring 6 labor hours and $61 of materials
Answer: $1105.3
Explanation:
The information given in the question is used to solve the question below
Materials = $61
Materials markup = $61 × 30% = $61 × 0.3 = $18.3
Labor = $171 × 6 = $1026
The total price for the services will be:
= $61 + $18.3 + $1026
= $1105.3
I just smacked a baby, feelin good.
Hi there..i just need to vent i feel so awful. Me and OH really struggled to get our almost 3 year old to sleep tonight. He has been quite defiant all day but just would not go to sleep for OH so i went up & sat for ages.
He was quite settled but then became v difficult & started kicking me & got my bump. I just mindlessly retaliated and smacked him on the bottom.. He really cried, i cant believe it.. Didnt help at all. Normally bedtime is all warm & cuddly & he lays down and goes to sleep while one of us sits there for 5 mins, but occasionally hes like this.
I know im feeling really hormonal but hate myself for this and he is going through a phase of hitting then i do this!!! How do i expect him to learn when i go and do exactly what we teach him is wrong? I just feel so awful like the worst mother in the world.... It scares me very occasionally just how angry i can feel. Can anyone offer any help or advice? Feel so ashamed :(
Answer: i- LOL
Explanation: does that happen to be a reference to the dream smp- or is it just me being a big fan O_O
What is the expected dividend to be paid in 3 years if yesterday's dividend was $6.00, dividends are expected to grow at a constant 6% annual rate, and the firm has a 10% expected return
Answer:
D3 = $7.146096 rounded off to $7.15
Explanation:
The dividend growth projected for the stock expects the stock to grow at a constant rate of 6% each year over an indefinite period of time. This means that the $6 dividend paid by the stock in the current year will grow by 6% every year over its life. Thus, the expected dividend to be paid in 3 years will be calculated as follows,
Lets say that the dividend just paid is D0. Thus, the dividend to be paid in 3 years will be D3. So, D3 will be calculated as follows,
D3 = D0 * (1+g)^3
D3 = 6 * (1+0.06)^3
D3 = $7.146096 rounded off to $7.15
Suppose the Baldwin company shifts focus to only competing in the Thrift and Nano segments, while competing on price by reducing costs and passing the savings to the customers, what strategy would they be implementing?a. Broad cost leaderb. Broad differentiationc. Niche cost leaderd. Niche differentiation
Suppose the Baldwin company shifts focus to only competing in the Thrift and Nano segments, while competing on price by reducing costs and passing the savings to the customers, the strategy would they be implementing is Niche cost leader .Thus option (c) is correct.
What is Niche cost leader?A Niche cost leader strategy concentrates mainly on the traditional and low end segments of the market.
The company will gain a competitive advantage by keeping research and development, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average.
Suppose the Baldwin company shifts focus to only competing in the Thrift and Nano segments, while competing on price by reducing costs and passing the savings to the customers, the strategy would they be implementing is Niche cost leader .Therefore, option (c) is correct.
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A marketing manager wants to efficiently reach large numbers of customers in a creative way and she is not concerned about the production costs of the medium. Based on the manager's consideration, ________ will be the most appropriate promotional form.
Answer: Advertising
Explanation:
Advertising is referred to as a marketing communication that is used to promote a product or service. It is the most appropriate promotional form when an individual or firm does not consider the production cost that are involved.
Advertising has an advantage as it helps to reach a large number of audience and it also helps to pass messages across to the customers quicker.
Tawstir comany corporation has 400 obsolte tv monitor that they carry in their inventory at the intotal cost of 576000. if these monitor are upgrade at a total cost of 170000 they can be sold for a total of 230000. As an alternative, the computers can be sold in their present condition for $40,000.
Required:
What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?
Answer:
the net advantage of upgrading is $20,000
Explanation:
The computation of the net advantage or disadvantage is as follows:
Sales value after upgrading $230,000
Less: current sales value -$40,000
Incremental advantage of upgrading $190,000
Less:total cost of upgrading ($170,000)
Net advantage of upgrading $20,000
Hence, the net advantage of upgrading is $20,000
A Contracting Officer notifies you of an acquisition for a specific requirement and asks you to assist with market research to identify potential small businesses who could perform the work. What type of market research is this
Answer: tactical market research
Explanation:
The type of market research that will be used is the tactical market research. A tactical market research is typically done when there is a particular acquisition or need. It is designed in such a way that the specific questions can be answered.
Since the contracting officer notifies of an acquisition for a specific requirement and asks you to assist with market research to identify potential small businesses who could perform the work, the tactical market research should be used.
X Corporation and its two divisions, Domestic and Foreign, appear below:
Sales revenues, Domestic $640,000
Variable expenses, Domestic $371,300
Traceable fixed expenses, Domestic $76,500
Sales revenues, Foreign $493,900
Variable expenses, Foreign $281,800
Traceable fixed expenses, Foreign $63,900
In addition, X's common fixed expenses totaled $173,300 and were allocated as follows: $90,000 to the Domestic division and $83,300 to the Foreign division.
What is the segment margin for the Domestic division?
a. $178,700
b. $371,300
c. $102,200
d. $192,200
Answer:
d. $192,200
Explanation:
Preparation for What is the segment margin for the Domestic division
DOMESTIC division FOREIGN division
Sales revenues $640,000 $493,900
Less Variable expenses ($371,300) ($281,800)
Contribution margin $268,700 $212,100
($640,000-$371,300) ($493,900-$281,800)
Less Traceable fixed expenses ($76,500) ($63,900)
SEGMENT MARGIN $192,200 $148,200
(268,700-$76,500) (212,100-$63,900)
Therefore the segment margin for the Domestic division will be $192,200
Sewtfi861 Corporation makes an extra large part to use in one its fabulous products. A total of 16,000 units of this extra large part are produced and used every year. The company's costs of producing the extra large part at this level of activity are below:
Per Unit
Direct materials $3.50
Direct labor $8.10
Variable manufacturing overhead $8.60
Supervisor's salary $4.00
Depreciation of special equipment $2.40
Allocated general overhead $7.60
An outside supplier has offered to make the extra large part and sell it to Sewtfi861 for $32.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the extra large part has no salvage value or other use. The allocated general overhead represents fixed costs of the entire Sewtfi861 company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make the extra large part could be used to make more of one of the company's other fabulous products, generating an additional segment margin of $35,000 per year for that product.
Required:
What would be the annual financial advantage (disadvantage) for Sewtfi861 Corp. as a result of buying the extra large part from the outside supplier?
Answer:
Sewtfi861 Corporation
The annual financial disadvantage for Sewtfi861 Corporation buying the extra large part from the outside supplier would be:
$101,000.
Explanation:
a) Data and Calculations:
Cost implications:
In-house Outside
Production Production
Outside vendor's price $32.70
Direct materials $3.50
Direct labor $8.10
Variable manufacturing overhead $8.60
Supervisor's salary $4.00
Depreciation of special equipment $2.40 $2.40
Allocated general overhead $7.60 $7.60
Additional segment margin ($35,000/16,000) ($2.1875)
Total cost per unit $34.20 $40.5125
The annual financial disadvantage for Sewtfi861 Corporation buying the extra large part from the outside supplier would be 16,000 ($40.5125 - $34.20).
= $101,000
b) It looks better financially for Sewtfi861 Corporation to continue to make the large part in-house. If it goes ahead to buy the part from outside, it will suffer a total financial loss of $101,000 annually.
Waterway Industries has the following items at year-end:
Cash in bank $46500
Petty cash 550
Short-term paper with maturity of 2 months 9000
Postdated checks 2220
Waterway should report cash and cash equivalents of:_____.
A) $20,000.
B) $20, 300.
C) $25, 800.
D) $27, 200.
E) $21, 700.
Answer:
B $56,050
Explanation:
Cash and cash equivalents for water way is calculated as;
= Cash in bank + Petty cash + Short term paper with maturity of 2 months
Given that;
Cash in bank = $46,500
Petty cash = $550
Short term paper with maturity of 2 months = $9,000
= $46,500 + $550 + $9,000
= $56,050
Therefore, cash and cash equivalents for Water way is $56,050
g Suppose that the labor supply curve has the standard shape in that it continuously slopes upward. This implies that throughout the curve: a. there is no substitution effect b. the income effect is stronger than the substitution effect c. the substitution effect is stronger than the income effect d. there is no income effect
Answer:
c. the substitution effect is stronger than the income effect
Explanation:
When the labor supply curve has a continuously upward slope it means that the substitution effect is higher than the income effect. The substitution effect means that labor suppliers (households) will consider higher wages more attractive than other activities not related to work, e.g. leisure activities.
The income effect means that as the employees' total wages increase due to higher rates, they will work less and engage in more leisure activities. Since employees earn enough money to satisfy their needs, they are not motivated to work more hours.
Ahrends Corporation makes 46,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is below:
Direct materials $14.30
Direct labor 23.90
Variable manufacturing overhead 3.00
Fixed manufacturing overhead 28.30
Unit product cost $69.50
An outside supplier has offered to sell the company all of these parts it needs for $6700 a unit If the company accepts this offer, the facilities now being used to make the pert could be used to make more units of o product that is in high demand. The additional contribution margin on this other product would be $424,000 per year f the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $28.40 of the fixed manufacturing overhead cost being applied to the pert would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.
Required:
What is the maximum amount the compeny should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 53,000 units required eoch year?
Answer: 49.10 pee unit
Explanation:
Direct materials = $14.30
Add: Direct labor = 23.90
Add: Variable manufacturing overhead = 3.00
Add: Avoidable overhead = 28.30 - 28.40 = 0.10
Avoidable cost = 41.10
The maximum amount that the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 53,000 units required each year will be:
= 41.10 × 53000 + 424,000 / 53000
= 49.1 per unit
What is the meaning of employee evaluation
Answer:
An employee evaluation is the assessment and review of a worker's job performance.
Explanation: Most companies have an employee evaluation system wherein employees are evaluated on a regular basis (often once a year). Typically these assessments are done at year-end or on the employee's service anniversary.
Answer:
An employee evaluation is the assessment and review of a worker’s job performance. Most companies have an employee evaluation system wherein employees are evaluated on a regular basis (often once a year).
Explanation:
What will happen to your taxes when you own a home?
a. I will pay more income taxes.
b. I may pay less in taxes because my mortgage interest is deductible.
c. There will be no change in my income taxes.
Answer:
A. I will pay more income taxes.
On January 1, 2021, Gundy Enterprises purchases an office building for $338,000, paying $58,000 down and borrowing the remaining $280,000, signing a 9%, 10-year mortgage. Installment payments of $3,546.92 are due at the end of each month, with the first payment due on January 31, 2021.
Required:
Record the purchase of the building on January 1, 2021.
Answer:
Dr Building $338,000
Cr Cash $58,000
Cr Notes Payable $280,000
Explanation:
Preparation of the journal entry to Record the purchase of the building on January 1, 2021.
Based on the information given we were told that Gundy purchases an office building for the amount of $338,000 which means that if they paid $58,000 down and as well borrowed the remaining amount of $280,000 the journal entry to Record the purchase of the building on January 1, 2021 will be :
Dr Building $338,000
Cr Cash $58,000
Cr Notes Payable $280,000
(Being purchase of building)
A large human population, both globally and within individual countries, has been a concern since the time of Thomas Malthus. Country X is 95% desert. The government of Country X is concerned about not having enough arable land (land capable of being used to grow crops) in the country to produce the food needed to feed its population without increasing food imports. One government official proposes a project to irrigate large areas of the desert to convert these areas of desert to agricultural fields.
Required:
Describe one potential benefit of this proposed project.
Answer:
The most obvious potential benefit is turning desert land into arable land. As total arable land increases, the country will be able to grow more crops. As more crops are grown and harvested, the country will be able to feed larger populations without having to import large amounts of food. E.g. in many Arab nations, food and water are scarce and they are forced to import most of their food. If they didn't have oil exports, they wouldn't be able to pay for these imports.
A firm is considering the purchase of a $500,000 machine for its business. The machine is expected to increase sales by $237,000. The machine will have a 5 year useful life and will be depreciated over 5 years via the straight line method. There is no salvage value. The firm has a required rate of return of 10% for all new capital investments. The project's pro forma income statement is shown below:
Sales $237,000
Total Cost 137,000
Depreciation 100,000
EBIT $0
Taxes 0
Net income $0
The firm should: ___________
a. Accept the project because the NPV is $2,543
b. Accept the project because the NPV is $10,011
c. Reject the project because the NPV is negative $120,921
d. Reject the project because the NPV is negative $500,000
e. It doesnt matter since the NPV is 0
f. Cant tell since there isnt enough information
Answer:
c. Reject the project because the NPV is negative $120,921
Explanation:
As we know that the depreciation is a non-cash expense so here we need to add the depreciation expense again
Now the cash inflow would be $100,000 each year i.e. for 5 years
And, the initial investment is $500,000
Now we have to use the formula of NPV in an excel by using the NPV function
=NPV(rate,Year1 to Year5 cashflows)-Year0 cashflow
=NPV(10%,Year1 to Year5 cashflows)-500000
=-120,921
So as we can see that the npv comes in negative so the project should be rejected
Therefore the correct option is c.
Below table represents buyers’ willingness to pay for a roasted chicken and consider that there is only one supplier whose cost to produce 1 unit of the product is $2 and current price in the market is $6. Calculate total surplus in this market. (1 point)
------------------------------ Abraham----- Smith----Chuck
Willingness to pay -------- $10 -------- $7----------$5
Answer:
$13
Explanation:
total consumer surplus = ($10 - $6) + ($7 - $6) = $4 + $1 = $5
total supplier surplus = ($6 - $2) x 2 units = $4 x 2 = $8
total surplus in the market = consumer surplus + supplier surplus = $5 + $8 = $13
Since the price is higher than Chuck's willingness to pay, no transaction will occur resulting in 0 surplus.
Pentos International (PI) is in the heavy equipment industry. The debt rating for PI is AA, and the yield spread on AA-rated bonds for five-year maturity is 3% per year. The yield on a five-year treasury is 4% per year. The company recently announced that it would issue convertible bonds. The bonds will have no coupons and will have a maturity of five years and will pay $1000 at the end of five years. The bond can be converted to 20 shares of PI stock at the end of two years. The price of PI stock is $35. A call option on PI stock with an exercise price of $50 and maturity of five years is priced at $18. What is the fair value of the bond? Use simple compounding and ignore any dilution effects. Hint: Convertible bond price = (bond Price without options) + (Convertible Option)
Answer:
$1072.99
Explanation:
We have the
Risk Free Rate to be = 4%
Also, the Default Premium on AA Rated Bonds is = 3%
We calculate the YTM on AA Rated Bond as 4% + 3% = 7%
Maturity years = 5
Face Value, fv is given as = $1000
Price of Bond without option = 0 + fv / (1 + YTM)^Years to Maturity
= 1000 / (1 + 0.07)⁵ = $712.99
Next we calculate the Value of Conversion Option:
The Number of Shares that can be converted into is 20
Price of conversion= Fv / No. of Shares
= 1000 / 20 = $50
We have that a call option with 5 years to maturity with a strike price of $50 has its worth to be $18, so the conversion option is also going to be $18.
Value of Conversion Option = 20 x 18 = $360
Next we get the Fair Value of Convertible Bond:
= 712.99 + 360 = $1072.99
Therefore the Fair Value of Convertible Bond would be $1072.99
The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of YearCash $23,500 $18,700Accounts receivable (net) 56,000 48,000Merchandise inventory 35,500 40,000Prepaid expenses 4,750 7,000Accounts payable (merchandise creditors) 21,800 16,800Wages payable 4,900 5,800Required:A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.B. Briefly explain why net cash flow from operating activities is different than net income.
Answer:
A. Cash Flows from Operating Activities
Adjusted cash flow $101,000
Working capital adjustments:
Accounts receivable (8,000)
Inventory 4,500
Prepaid expenses 2,250
Accounts payable 5,000
Wages payable (900)
Net cash from operations $103,850
B. The difference in the net cash flow from operating activities and the net income results from the basis of calculating each parameter. The net cash flow from operating activities is calculated based on the cash basis while the net income is calculated based on the accrual basis and the latter takes into account all income and expenses whether cash movement is involved or not.
Explanation:
a) Data and Calculations:
Net income = $73,600
Depreciation 27,400
Adjusted cash flow = $101,000
Working capital balances:
End of Year Beginning Increase/Decrease
of Year
Cash $23,500 $18,700 $4,800
Accounts receivable (net) 56,000 48,000 8,000
Merchandise inventory 35,500 40,000 $4,500
Prepaid expenses 4,750 7,000 2,250
Accounts payable
(merchandise creditors) 21,800 16,800 5,000
Wages payable 4,900 5,800 900
Cash Flows from Operating Activities
Adjusted cash flow $101,000
Working capital adjustments:
Accounts receivable (8,000)
Inventory 4,500
Prepaid expenses 2,250
Accounts payable 5,000
Wages payable (900)
Net cash from operations $103,850
