Q27Q. Net income for the year for Tani... [FREE SOLUTION]

Chapter 5: Q27Q. (page 238)

Net income for the year for Tanizaki, Inc. was $750,000, but the statement of cash flows reports that net cash provided by operating activities was $860,000. Tanizaki also reported capital expenditures of $75,000 and paid dividends in the amount of $30,000. Compute Tanizaki鈥檚 free cash flow

Short Answer

Expert verified

The free cash flow of the business entity is$755,000.

Step by step solution

Definition of Liquidity

Liquidity is the measure reflecting the capacity that a business entity possesses for repaying the obligations that will become due in a short period is known as liquidity.

Calculation of Free Cash Flow

Particular	Amount $
Net cash provided by operating activities	$860,000
Less: Capital expenditure	(75,000)
Less: Cash dividend	(30,000)
Free Cash Flow	$755,000

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CONSTANTINE CAVAMALIS INC
BALANCE SHEETS
Assets	Dec 31, 2017	Jan 1, 2017	Inc./Dec.
Cash	\(45,000	\)13,000	\(32,000 Inc.
Accounts receivable	91,000	88,000	3,000 Inc.
Equipment	39,000	22,000	17,000 Inc.
Less: Accumulated depreciation 鈥� Equipment	(17,000)	(11,000)	6,000 Inc.
Total	158,000	\)112,000

Liabilities and Stockholder鈥檚 equity
Account payable	\(20,000	\)15,000	5,000 Inc.
Common stock	100,000	80,000	20,000 Inc
Retained earnings	38,000	17,000	21,000 Inc.
Total	\(158,000	\)112,000

Particular	Debit	Credit
Cash	\(197,000
Sales Revenue		\)8,100,000
Debt investment (trading) (at cost \(145,000)	153,000
Cost of goods sold	4,800,000
Debt investment (long-term)	299,000
Equity Investment (long-term)	277,000
Notes payable (Short-term)		90,000
Account payable		455,000
Selling expenses	2,000,000
Investment revenue		63,000
Land	260,000
Buildings	1,040,000
Dividend payable		136,000
Accrued Liabilities		96,000
Accounts Receivable	435,000
Accumulated depreciation 鈥� Building		152,000
Allowance for doubtful accounts		25,000
Administrative expenses	900,000
Interest expenses	211,000
Inventory	597,000
Gain		80,000
Notes payable		900,000
Equipment	600,000
Bonds payable		1,000,000
Accumulated depreciation 鈥� Equipment		60,000
Franchises	160,000
Common stock		1,000,000
Treasury stock	191,000
Patents	195,000
Retained Earnings		78,000
Paid-in-capital in excess of par		80,0000
Total	\)12,315,000	$12,315,000

MADRASAH CORPORATION
BALANCE SHEETS
Assets	Dec 31, 2017	Jan 1, 2017	Inc./Dec.
Cash	\(20,000	\)13,000	\(7,000 Inc.
Accounts receivable	106,000	88,000	18,000 Inc.
Equipment	39,000	22,000	17,000 Inc.
Less: Accumulated depreciation 鈥� Equipment	17,000	11,000	6,000 Inc.
Total	\)148,000	\(112,000

Liabilities and Stockholder鈥檚 equity
Account payable	\)20,000	\(15,000	5,000 Inc.
Common stock	100,000	80,000	20,000 Inc.
Retained earnings	28,000	17,000	11,000 Inc.
Total	\)148,000	\(112,000

91影视

Net income for the year for Tanizaki, Inc. was \(750,000, but the statement of cash flows reports that net cash provided by operating activities was \)860,000. Tanizaki also reported capital expenditures of \(75,000 and paid dividends in the amount of \)30,000. Compute Tanizaki鈥檚 free cash flow

Short Answer

Step by step solution

Definition of Liquidity

Calculation of Free Cash Flow

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