Question
In: Accounting
For each transaction below, write the net effect on Current Assets (CA), Total Assets, Net Income...
For each transaction below, write the net effect on Current Assets (CA), Total Assets, Net Income Before Taxes (NI pretax), Cash flows from operating activities (CFO), and Cash flows from investing activities (CFI).
- Write only the effect for the current period.
- Assume the company is a merchandising firm.
- If the net effect is negative, include a negative sign. If no effect, write 0.
- For CFO and CFI, positive net inflows are positive, net cash outflows are negative.
- For classifying interest expense, assume U.S. GAAP conventions.
|
Transaction |
CA |
Total Assets |
NI (pretax) |
CFO |
CFI |
|
Pay $25 to improve a piece of machinery |
Answer |
Answer |
Answer |
Answer |
Answer |
|
Impair a plot of land from $75 down to $20 |
Answer |
Answer |
Answer |
Answer |
Answer |
|
Pay $82 for delivery
truck |
Answer |
Answer |
Answer |
Answer |
Answer |
|
Recognize $25 of warranty expense (Company has Warranty Reserve liability) |
Answer |
Answer |
Answer |
Answer |
Answer |
|
Sell a store location with net book value of $92 for $110 in cash |
Solutions
Expert Solution
| Transaction | CA | Total assets | NI (pretax) | CFO | CFI |
| Pay $25 to improve machine | $ - | $ - | $ (25) | $ (25) | $ - |
| Impair a plot of land from $75 to $20 | $ - | $ (55) | $ (55) | $ - | $ - |
| Pay $82 for delivery truck | $ (82) | $ - | $ - | $ - | $ (82) |
| Recognize $25 warranty | $ - | $ - | $ (25) | $ - | $ - |
| Sell a store location | $ 110 | $ (92) | $ 18 | $ - | $ 110 |
ekkarill92 answered 9 months agoRelated Solutions
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Evaluate the effect of each transaction by constructing a balance sheet showing an assets side and...
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