In: Accounting
use chart for ALL questions
Hernandez Inc. was founded on 12/1/2017. The initial balance sheet is as follows:
Balance Sheet-12/1/2017 |
||
Assets |
Liabilities and Owners Equity |
|
Cash 2500 |
Debt |
0 |
Long Term Assets 1800 |
Stock |
5200 |
Inventory 900 |
||
Total 5200 |
Total |
5200 |
Suppose that the following transactions occurred between 12/1/2017 and 12/31/2017:
Inventory purchase of $600 (paid in cash)
$1600 worth of credit sales (due on 1/31/2018)
Operating Accruals of $50
Depreciation of $200
Taxes of $100 (paid 12/20/2017)
Ending inventory of $400
QUESTIONS:
47. What is the company’s net income on 12/31/2017?
48. Find the amount of cash the company paid to its suppliers from 12/1-12/31.
49. What is the company’s cash flow from operations on 12/31/2017?
50. What is the retained earnings balance on 12/31/2017?
51. Find Hernandez Inc.'s operating cash margin from 1/1-1/31.
Solution:
(47) : Computation of Company’s Net income on 12/3/2017 –
(48) : Amount of cash the company paid to its suppliers from 12/1-12/31 –
Amount of cash paid to its suppliers = 600
(49) : Computation of Company’s Cash Flow from operations on 12/31/2017
(50) : Retained earnings balance on 12/31/2017 –
Retained earnings = 150
=(same as Net income)
(51) : Computation of Hernandez Inc.'s operating cash margin from 1/1-1/31.
operating cash margin = Cashflow from operation / sales
= 250/1600
=0.15625*100
= 15.63%