The following income statement and additional year-end information is provided.

Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Comparative financial statement data for Carmono Company follow:

For this year, the company reported net income as follows:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmono’s free cash flow for this year.

On the first day of its fiscal year, Chin Company issued $16,800,000 of five-year, 4% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 6%, resulting in Chin Company receiving cash of $15,366,859.

a. Journalize the entries to record the following:

Issuance of the bonds.

First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

b. Determine the amount of the bond interest expense for the first year.
$

c. Why was the company able to issue the bonds for only $15,366,859 rather than for the face amount of $16,800,000?
The market rate of interest is the contract rate of interest.

Sage Inc. experienced the following transactions for Year 1, its first year of operations: Issued common stock for $90,000 cash. Purchased $195,000 of merchandise on account. Sold merchandise that cost $162,000 for $322,000 on account. Collected $292,000 cash from accounts receivable. Paid $175,000 on accounts payable. Paid $66,000 of salaries expense for the year. Paid other operating expenses of $82,000. Sage adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $ 18,000 0.01 0–30 7,500 0.05 31–60 1,500 0.10 61–90 1,500 0.20 Over 90 days 1,500 0.50 Required Organize the transaction data in accounts under an accounting equation. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for Sage Inc. for Year 1. What is the net realizable value of the accounts receivable at December 31, Year 1?

Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses.

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $17,125 (details in b).
2. Sold equipment costing $82,875, with accumulated depreciation of $42,125, for $23,625 cash.
3. Purchased equipment costing $108,375 by paying $54,000 cash and signing a long-term note payable for the balance.
4. Borrowed $5,200 cash by signing a short-term note payable.
5. Paid $56,125 cash to reduce the long-term notes payable.
6. Issued 3,700 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $52,500.

Required:
1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Use the table, which shows a farm’s production possibilities, to work Problems 2 and 3.

2. If the farm uses its resources efficiently, what is the opportunity cost of an increase in chicken production from 300 pounds to 500 pounds a year? Explain your answer.

3. If the farm adopted a new technology, which allows it to use fewer resources to fatten chickens, explain how the farm’s production possibilities will change. Explain how the opportunity cost of producing a bushel of soybean will be affected.

4. "Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?

5. The United States can use all of its resources to produce 50 computers or 4,000 shoes. Suppose

that at world market prices, one computer exchanges for 100 shoes. Explain how the United States can gain from trade

.

On January 2, Year 1, the ABC Inc. a private-held company whose fiscal year end is December 31, issued $2,200,000, five-year, 12% of bonds, dated January 2, Year 1. The bonds provided for semiannual interest payments to be made on June 30 and December 31 of each year. The bond comes with a call option which allows ABC to call back at 102 after one year. The bonds were issued when the market interest rate was 8%.

● ABC uses the effective interest method for amortizing bond discounts and premiums.

● The company called the bonds at 102 on June 30, Year 2.

Present Value Factors

PV of $1 at 12% for 5 periods                                                          0.5674

PV of $1 at 6% for 10 periods                                                          0.5584

PV of $1 at 4% for 10 Periods                                                          0.6756

PV of an annuity of $1 at 12% for 5 periods                                     3.6048

PV of an annuity of $1 at 6% for 10 periods                                     7.3601

PV of an annuity of $1 at 4% for 10 periods                                     8.1109

Required:

Please prepare the bond amortization table for the original ABC bond which issued 1/2/Year 1.

Please calculate the gain or loss on the early retirement of the bond.

Given the information:

Cash inflows: $500,000 per year for indefinite year;

Cash costs: 72% of sales

Initial investment: $475,000

Tax rate: 34%

Unlevered required rate of return = 20%

It is assumed that the firm finances 25% of the investment by debt (interest rate of 10%) and the remaining by equity.

Required:

Calculate the value of project using:

(a) APV;

(b) FTE; and

(c) WACC approaches.

Hampton Industries had $71,000 in cash at year-end 2018 and $22,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $280,000 — the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$240,000. Round your answers to the nearest dollar, if necessary.

1. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.

   $  

2. If accruals increased by $20,000, receivables and inventories increased by $155,000, and depreciation and amortization totaled $9,000, what was the firm's net income?

   $