Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

11. The intent of this problem is to test mastery of the material covered in the Application of the Cash Flow Identity that constitutes

image text in transcribed

11. The intent of this problem is to test mastery of the material covered in the Application of the Cash Flow Identity that constitutes a majority of Lesson 1. (Items 2-7 worth 1.5 pts. each) Consider each of the five components of the Cash Flow Identity: Operating Cash Flow (which, itself, equals Operating Income + Depreciation Expense - Tax Expense), ANet Working Capital, Net Capital Spending (which itself is ANet Fixed Assets + Depreciation Expense - Gain on Sale of Asset), Cash Flow to Creditors, and Cash Flow to Shareholders. Also consider that Cash Flow from Assets = Operating Cash Flow - ANet Working Capital - Net Capital Spending. Construct a simple table, calculating a value for each of the five components and for Cash Flow from Assets, for each of the following transactions: (1) The firm pays a $300 dividend expense with cash. (2) The firm generates $3300 in revenues, all paid for by customers on credit. (3) The firm purchases $830 of inventory, all on credit. (4) The firm issues $1600 of long-term bonds in exchange for cash. (5) The firm depreciates one long-term asset by $1100. (6) The firm purchases a new long-term asset with cash for $4500. (7) The firm announces a year-end tax expense of $375, payable the following year on April 15. (Please use "n/a" to indicate when a component is "not affected", or you may just leave the component empty. Please be sure to format your cells so that $0s and empty cells do not look the same! See below for a representative table (with the answer to 1 shown).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems

Authors: James A. Hall

8th edition

2901111972140, 1111972141, 978-1111972141

More Books

Students also viewed these Accounting questions