(Computation of Operating Activities—Direct Method) Presented below are two independent situations

E23-7 (Computation of Operating Activities—Direct Method) Presented below are two independent situations.

Situation A:
Chenowith Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2010. Accounts receivable and accounts payable at year-end were $71,000 and $39,000, respectively. Assume that the accounts payable related to operating expenses. Ignore income taxes.

Instructions
Using the direct method, compute net cash provided (used) by operating activities.

Situation B:
The income statement for Edgebrook Company shows cost of goods sold $310,000 and operating expenses (exclusive of depreciation) $230,000. The comparative balance sheet for the year shows that inventory increased $21,000, prepaid expenses decreased $8,000, accounts payable (related to merchandise) decreased $17,000, and accrued expenses payable increased $11,000.

Instructions
Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.

Click here for the solution: (Computation of Operating Activities—Direct Method) Presented below are two independent situations

Brecker Company lease an automobile with a fair value of $10,906 from Emporia Motors, Inc, on the following terms

Exercise 21-2 (E21-2) (Lessee Computation and Entries, Capital Lease with Guaranteed Residual Value) Brecker Company lease an automobile with a fair value of $10,906 from Emporia Motors, Inc, on the following terms:

1. Noncancelable term of 50 months
2. Rental of $250 per month (at end of each month). (The present value at 1% per month is $9,800.)
3. Estimated residual value after 50 months is $ 1,180.(the present value at 1% per month is $715.) Brecker Company guarantees the residual value of $ 1,180.
4. Estimated economic life of the automobile is 60 months
5. Brecker Company's incremental borrowing rate is 12% a year (1% a month). Emporia's implicit rate is unknown.

Instructions:
(a.) What is the nature of the lease to Brecker Company?
(b.) What is the present value of the minimum lease payments?
(c.) Record the lease on Brecker Company's books a the date of inception.
(d.) Record the first month's depreciation on Brecker Company's books (assume straight lined)
(e.) Record the first month's lease payment.

Click here for the solution: Brecker Company lease an automobile with a fair value of $10,906 from Emporia Motors, Inc, on the following terms

(Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information

Exercise 24-4 (E24-4) (Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information.

AND SO ON

Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. Inasmuch as your bank has reached its quota for loans of this type, only one of these requests is to be granted.
  Instructions
Which of the two companies, as judged by the information given above, would you recommend as the better risk and why? Assume that the ending account balances are representative of the entire year.
 
Click here for the solution: (Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information

(Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods

ACC 421 Week 5

Exercise 6-5 (E6-5) (Computation of Present Value)
Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods.
(a) $30,000 receivable at the end of each period for 8 periods compounded at 12%.
(b) $30,000 payments to be made at the end of each period for 16 periods at 9%.
(c) $30,000 payable at the end of the seventh, eighth, ninth, and tenth periods at 12%.

Click here for the solution: (Computation of Present Value) Using the appropriate interest table, compute the present values of the following periodic amounts due at the end of the designated periods