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In: Accounting
Metro Bus Company had $400,000 of revenue and $401,000 of expense (including depreciation) for the current...
Metro Bus Company had $400,000 of revenue and $401,000 of expense (including depreciation) for the current year resulting in a $1,000 net loss. All revenues were received in cash. All expenses were paid in cash, except for depreciation of $181,000. At the end of the year, the Balance Sheet shows $225,000 of Cash and $1,775,000 of other assets. The Company has no debt and all of the busses are modern - there is no plan to purchase more busses. Although there is sufficient Retained Earnings and they historically have paid dividends of $25,000, Management has decided against paying a dividend to stockholders in the current year. Instead, they issue a statement to their stockholders, explaining that "with a $1,000 net loss, Management feels there is insufficient cash for the dividend."
What is the Company's cash flow? What is the difference between cash flow and net income? Evaluate the accuracy of Management's statement: "with a $1,000 net loss, Management feels there is insufficient cash for the dividend." Evaluate the plan to skip the dividend. How would your response change if the stockholders were (a) common stockholders, (b) non-cumulative preferred, or (c) cumulative preferred?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Instructor - Lead Question Metro Bus Company had $400,000 of revenue and $401,000 of expense (including...
Instructor - Lead Question
Metro Bus Company had $400,000 of revenue and $401,000 of
expense (including depreciation) for the current year resulting in
a $1,000 net loss. All revenues were received in cash. All expenses
were paid in cash, except for depreciation of $181,000. At the end
of the year, the Balance Sheet shows $225,000 of Cash and
$1,775,000 of other assets. The Company has no debt and all of the
busses are modern - there is no plan to...
Revenue and expense data for the current calendar year for Dawg Electronics Company and for the...
Revenue and expense data for the current calendar year for Dawg
Electronics Company and for the electronics industry are as
follows. Dawg Electronics Company data are expressed in dollars.
The electronics industry averages are expressed in percentages.
Dawg
Electronics
Company
Electronics
Industry
Average
Sales
$ 3,750,000
100
%
Cost of goods sold
(2,062,500)
(61.0)
Gross profit
$1,687,500
39.0
%
Selling expenses
$(1,125,000)
(23.0)
%
Administrative expenses
(262,500)
(10.0)
Total operating expenses
$(1,387,500)
(33.0)
%
Operating income
$300,000
6.0
%
Other...
Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics...
Revenue and expense data for the current calendar year for
Tannenhill Company and for the electronics industry are as follows.
Tannenhill’s data are expressed in dollars. The electronics
industry averages are expressed in percentages.
1
Tannenhill Company
Electronics Industry Average
2
Sales
$4,920,000.00
100.0%
3
Cost of goods sold
2,533,800.00
56.5
4
Gross profit
$2,386,200.00
43.5%
5
Selling expenses
$1,328,400.00
24.0%
6
Administrative expenses
787,200.00
14.0
7
Total operating expenses
$2,115,600.00
38.0%
8
Operating income
$270,600.00
5.5%
9
Other revenue...
1) Wick Inc., has sales of $889,095.00, operating costs (not including depreciation) of $320,074.20, depreciation expense...
1) Wick Inc., has sales of $889,095.00, operating costs (not
including depreciation) of $320,074.20, depreciation expense of
$124,473.30, interest expense of $62,236.65, and a tax rate of
38.00%. What is the net income for this firm?
a. $237,032.73
b. $237,032.73
c. $145,278.12
d. $168,928.05
2)Given the following Financial Information Answer the following
question:
2017
2018
Cash
3,000
461,305
Accounts Receivable
9,000
9,900
Inventory
5,000
5,500
Prepaid Assets
3,000
3,300
Other Assets
5,000
5,500
Total Current Assets
25,000
485,505
Net PPE...
debit credit retained earnings 17150 service revenue 30500 advertising expense 1200 depreciation expense 10750 interest expense...
debit
credit
retained earnings
17150
service revenue
30500
advertising expense
1200
depreciation expense
10750
interest expense
560
salaries expense
5000
supplies expense
2500
utilities expense
2080
dividends
1000
a Prepare Sparks’ income statement and statement of
retained earnings for the month of June.
b Prepare the appropriate closing entries at 30
June.
c What is the purpose of ‘closing the books’ at the
end of an
accounting period?
1) A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts...
1) A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
a.$224,000
b.$284,000
c.$217,000
d.$305,000
2) The budgeted finished goods inventory and cost...
A company had net income of $210000. Depreciation expense is $27000. During the year, Accounts Receivable...
A company had net income of $210000. Depreciation expense is
$27000. During the year, Accounts Receivable and Inventory
increased $17000 and $42000, respectively. Prepaid Expenses and
Accounts Payable decreased $5000 and $6000, respectively. There was
also a loss on the sale of equipment of $2000. How much cash was
provided by operating activities?
$179000
$241000
$271000
$175000
A company had net income of $226,932. Depreciation expense was $25,699. During the year, accounts receivable...
A company had net income of $226,932. Depreciation expense was
$25,699. During the year, accounts receivable and inventory
increased by $15,649 and $27,550, respectively. Prepaid expenses
and accounts payable decreased by $3,313 and $6,060, respectively.
There was also a loss on the sale of equipment of $6,825. How much
was the net cash flow from operating activities on the statement of
cash flows using the indirect method?
Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and...
Common-Sized Income Statement
Revenue and expense data for the current calendar year for
Tannenhill Company and for the electronics industry are as follows.
Tannenhill’s data are expressed in dollars. The electronics
industry averages are expressed in percentages.
Tannenhill
Company
Electronics
Industry
Average
Sales
$1,060,000
100
%
Cost of goods sold
699,600
69
Gross profit
$360,400
31
%
Selling expenses
$212,000
18
%
Administrative expenses
84,800
7
Total operating expenses
$296,800
25
%
Operating income
$63,600
6
%
Other income
21,200...
Common-Sized Income Statement Revenue and expense data for the current calendar year for Tannenhill Company and...
Common-Sized Income Statement
Revenue and expense data for the current calendar year for
Tannenhill Company and for the electronics industry are as follows.
Tannenhill’s data are expressed in dollars. The electronics
industry averages are expressed in percentages.
Tannenhill
Company
Electronics
Industry
Average
Sales
$2,240,000
100
%
Cost of goods sold
1,478,400
71
Gross profit
$761,600
29
%
Selling expenses
$448,000
16
%
Administrative expenses
179,200
7
Total operating expenses
$627,200
23
%
Operating income
$134,400
6
%
Other revenue
44,800...
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