91Ó°ÊÓ

Building an Income Statement Ragsdale, Inc., has sales of \(\$ 493,000\), costs of \(\$ 210,000\), depreciation expense of \(\$ 35,000\), interest expense of \(\$ 19,000\), and a tax rate of 35 percent. What is the net income for the firm? Suppose the company paid out \(\$ 50,000\) in cash dividends. What is the addition to retained earnings?

Calculating Net Capital Spending Gordon Driving School's 2009 balance sheet showed net fixed assets of \(\$ 1.65\) million, and the 2010 balance sheet showed net fixed assets of \(\$ 1.73\) million. The company's 2010 income statement showed a depreciation expense of \(\$ 284,000\). What was Gordon's net capital spending for \(\mathbf{2 0 1 0}\) ?

Cash Flow to Stockholders The 2009 balance sheet of Anna's Tennis Shop, Inc., showed \(\$ 430,000\) in the common stock account and \(\$ 2.6\) million in the additional paid-in surplus account. The 2010 balance sheet showed \(\$ 450,000\) and \(\$ 3.05\) million in the same two accounts, respectively. If the company paid out \(\$ 385,000\) in cash dividends during 2010, what was the cash flow to stockholders for the year?

Building an Income Statement During the year, the Senbet Discount Tire Company had gross sales of \(\$ 1.2\) million. The firm's cost of goods sold and selling expenses were \(\$ 450,000\) and \(\$ 225,000\), respectively. Senbet also had notes payable of \(\$ 900,000\). These notes carried an interest rate of 9 percent. Depreciation was \(\$ 110,000\). Senbet's tax rate was 35 percent. 1\. What was Senbet's net income? 2\. What was Senbet's operating cash flow?

Calculating Total Cash Flows Schwert Corp. shows the following information on its 2010 income statement: sales \(=\$ 167,000 ;\) costs \(=\$ 91,000 ;\) other expenses \(=\$ 5,400\); depreciation expense \(=\$ 8,000\); interest expense \(=\$ 11,000 ;\) taxes \(=\$ 18,060\); dividends \(=\$ 9,500\). In addition, you're told that the firm issued \(\$ 7,250\) in new equity during 2010 and redeemed \(\$ 7,100\) in outstanding long-term debt. 1\. What is the \(\mathbf{2 0 1 0}\) operating cash flow? 2\. What is the 2010 cash flow to creditors? 3\. What is the \(\mathbf{2 0 1 0}\) cash flow to stockholders? 4\. If net fixed assets increased by \(\$ 22,400\) during the year, what was the addition to net working capital (NWC)?

Net Fixed Assets and Depreciation On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account, which records the acquisition cost of fixed assets, minus the accumulated depreciation (AD) account, which records the total depreciation taken by the firm against its fixed assets. Using the fact that NFA \(=F A-A D\), show that the expression given in the chapter for net capital spending, \(N F A_{\text {end }}-N_{\text {beg }}+D\) (where \(D\) is the