Question
Consider the following abbreviated financial statements for Parrothead Enterprises: PARROTHEAD ENTERPRISES 2010 and 2011 Partial Balance Sheets Assets 2010 2011 Liabilities and Owners Equity 2010
Consider the following abbreviated financial statements for Parrothead Enterprises: |
PARROTHEAD ENTERPRISES | |||||
2010 and 2011 Partial Balance Sheets | |||||
Assets | 2010 | 2011 | Liabilities and Owners Equity | 2010 | 2011 |
Current assets | $ 1,284 | $ 1,411 | Current liabilities | $ 573 | $ 619 |
Net fixed assets | 5,064 | 6,131 | Long-term debt | 2,771 | 2,951 |
PARROTHEAD ENTERPRISES | |
2011 Income Statement | |
Sales | $ 15,922 |
Costs | 7,252 |
Depreciation | 1,441 |
Interest paid | 440 |
a. What is owners' equity for 2010 and 2011? (Do not round intermediate calculations.)
Total assets = Current assets + Net fixed assets
Total liabilities = Current liabilities + Long term debt
Total assets = Total liabilities + Total equity
2010: 2011:
Tot assets = (1284+5064) = $6348 Tot assets = (1411+ 6131) = $7542
Tot liabilities = (573+2771) = $3344 Tot liabilities = (619 + 2951) = $3570
Tot owners equity = (6348 - 3344) = $3004 Tot owners equity = (7542 - 3570) = $3972
b. What is the change in net working capital for 2011? (Do not round intermediate calculations.)
Net working capital = Current assets - Current liabilities
= (1411 - 619) = $792
c-1. In 2011, Parrothead Enterprises purchased $2,652 in new fixed assets. How much in fixed assets did Parrothead Enterprises sell? (Do not round intermediate calculations.)
Fixed assets sold = 2652 - Net Capital spending
Net Capital Spending = 1,411 + 6,131 - 5,064 = 2,508
Fixed assets sold = 2652 - 2,508
= 144
c-2. In 2011, Parrothead Enterprises purchased $2,652 in new fixed assets. What is the cash flow from assets for the year? The tax rate is 21 percent. (Do not round intermediate calculations.)
EBIT = Sales - Costs - Depreciation Expense
= 15,922 - 7,252 - 1,441
= $7229
EBT = Sales - Costs - Depreciation Expense - interest expense
= 15,922 - 7,252 - 1,441 - 440
= $6,789
Taxes = tax rate % * EBT
= .21 * $6,789
= $1,425.69
Operating Cashflow = EBIT + Depreciation - Tax
= $7,229 + $1,441 - $1,425.69
= 7244.31
Change in WC = (2021 CA - 2021 CL) - (2020 CA - 2020 CL)
= (1411 - 619) - (1284 - 573)
= 81
Cashflow from assets = operating cashflow - net capital spending - change in wc
= 7244.31 - 2508 - 81
= 4655.31
Need the D answer
d part 1. During 2011, Parrothead Enterprises raised $569 in new long-term debt. How much long-term debt must Parrothead Enterprises have paid off during the year? (Do not round intermediate calculations.)
d part 2. During 2011, Parrothead Enterprises raised $569 in new long-term debt. What is the cash flow to creditors? (Do not round intermediate calculations.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started