Twelve years ago, Mr. and Mrs. Chang purchased a business. This year, they sold the business for

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Twelve years ago, Mr. and Mrs. Chang purchased a business. This year, they sold the business for $750,000. On date of sale, the business balance sheet showed the following assets:
Twelve years ago, Mr. and Mrs. Chang purchased a business.

The sales contract allocated $40,000 of the purchase price to accounts receivable, $515,000 to inventory, and $70,000 to furniture and fixtures. Assuming that the Changs€™ marginal tax rate on ordinary income is 33 percent and their rate on capital gain is 15 percent, compute the net cash flow from the sale of their business.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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