Quiz ch1&2

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

$10,400 Explanation Net working capital = $21,100 + 8,600 - 19,300 = $10.400

Stacey's Fabrics, a sole proprietorship earned $260,000 in taxable income for the year. How much tax does the company owe?

$66,690 Explanation Total tax = 10($9,525) + 12($29,175) + .22($43,800) + .24($75.000) + 32($42,500) + .35($260,000 - $200,000) = $66,690 Total

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent?

EBIT = $821,300 -698,500 -28,400 = $94,400 Tax = ($94,400 -8,400) ×.34 = $29,240 OCF = $94,400 + 28,400 -29,240 = $93,560

For Year 2016, Precision Masters had sales of $42,900, cost of goods sold of $26,800, depreciation expense of $1,900, interest expense of $1,300, and dividends paid of $1,000. At the beginning of the year, net fixed assets were $14,300, current assets were $8,700, and current liabilities were $6,600. At the end of the year, net fixed assets were $13,900, current assets were $9,200, and current liabilities were $7,400. The tax rate was 34 percent. What is the cash flow from assets for 2016?

Explanation EBIT = (($42.900 - 26,800 - 1.900) = $14.200 Taxes = ($14,200 - 1.300 .34)= $4.386 OCF = $14.200 + 1,900 - 4.386 = $11.714 CFA = $11,714 - ($13,900 - 14,300 + 1,900) - (($9,200 - 7,400) - ($8,700 - 6,600)] = $10,514

The financial statements of Blue Fin Marina reflect depreciation expenses of $41,600 and interest expenses of $27,900 for the year. The current assets increased by $31,800 and the net fixed assets increased by $28,600. What is the amount of the net capital spending for the year?

Net capital spending = $28,600 + 41,600 = $70,200

On December 31, 2015, The Play House had net fixed assets of $812,650 while the December 31, 2016 balance sheet showed net fixed assets of $784,900. Depreciation for 2016 was $84,900. What was the firm's net capital spending for 2016?

Net capital spending = $784,900-812,650 + 84,900 = $57,150

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 34 percent. What is the net income for this firm?

Net income = ($398,600 -254,800 -26,400 -1,600) (1 -.34) = $76,428

Which one of these is correct?

Net income is distributed either to dividends or retained earnings.

Taylor Industries has current liabilities of $54,900 and accounts receivable of $88,700. The firm has total assets of $395,000 and net fixed assets of $265,100. The owners' equity has a book value of $147,500. What is the amount of the net working capital?

Net working capital = $395,000 - 265,100 - 54,900 = $75,000

Firms that compile financial statements according to GAAP:

can still manipulate their earnings to some degree