Question 2: prepare the journal entries for the following cases:

1- The cost of equipment SR75,000 accumulated depreciation SR75,000

The company disposes the equipment (no salvage value).

2- The cost of equipment SR80,000 accumulated depreciation SR60,000

The company disposes the equipment (no salvage value).

3- The cost of equipment SR85,000 accumulated depreciation SR70,000

The company sold the equipment for 12,000.

4- The cost of equipment SR95,000 accumulated depreciation SR70,000

The company sold the equipment for 30,000.

5- Delta Inc. trades (exchange) its used (old) machine for a new model with Alpha Co.

The used machine has a book value of SR8,000 (original cost SR12,000 less SR4,000 accumulated depreciation) and a fair value of SR5,000.

Delta will pay SR9000.

The exchange has commercial substance.

6- Delta Inc. trades its used (old) machine for a new model at Alpha Inc.

The exchange has commercial substance.

The used machine has a book value of $6,000 (original cost $11,000 less $5,000 accumulated depreciation) and a fair value of $8,000.

Delta will pay $8000 cash.

Computes the cost of the new machine for Delta Company, and record the exchange transaction in Delta Journal book?

The cost of new machine = fair value of old machine + cash paid= 8000 + 8000 = 18000

There is a gain = fair value - book value = 8000 6000 = 2000

7- Compute: 1-Current Cash Debt Coverage Ratio and 2-Cash Debt Coverage Ratio using the following data:

Net Cash Provided by Operating Activities $70,000

Average Current Liabilities $50,000

Average Total Liabilities $100,000

8- Compute free cash flow using the following data:

Net operating cash flow 90,000 capital expenditure 20,000 dividends 15,000