For how many days could Earl Grey Golf Corp. continue to operate if its cash inflows were
Question:
For how many days could Earl Grey Golf Corp. continue to operate if its cash inflows were suddenly suspended?
EARL GREY GOLF CORP. 2011 and 2012 Statement of Financial Position Liabilities and Owners' Equity Assets 2011 2011 2012 2012 Current liabilities Current assets $ 21,860 $ 22,050 $ 19,320 $ 22,850 Accounts payable Notes payable Other Total Cash Accounts receivable 11,316 10,000 9,643 $ 38,963 $ 75,000 $ 25,000 9,000 13,850 24,650 Inventory Total 23,084 $ 56,260 11,385 $ 43,235 $ 85,000 $ 25,000 $ 60,550 Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity Fixed assets Net plant and equipment $234,068 $260,525 151,365 $176,365 167,840 $192,840 Total assets $290,328 $321,075 $290,328 $321,075 EARL GREY GOLF CORP. 2012 Statement of Comprehensive Income Sales $ 305,830 Cost of goods sold 210,935 Depreciation 26,850 Earnings before interest and tax $ 68,045 Interest paid 11,930 Taxable income $ 56,115 Taxes (35%) 19,640 Net Income $ 36,475 Dividends $ 20,000 Additions to retained earnings 16,475
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The number of days a company can operate if cash infl...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0071051606
8th Canadian Edition
Authors: Stephen A. Ross, Randolph W. Westerfield
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Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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