Question 16
Martinez Corporation engaged in the following cash transactions during 2014.
Sale of land and building $191,000
Purchase of treasury stock $40,000
Purchase of land $37,000
Payment of cash dividend $95,000
Purchase of equipment $53,000
Issuance of common stock $147,000
Retirement of bonds $100,000
Determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of
$400,000.00
* Question 17
A comparative balance sheet for Shabbona Corporation is presented below.
31/12/2015
Assets 2014 2013
Cash $73,000 $22,000
Accounts receivable 82,000 66,000
Inventory 180,000 189,000
Land 71,000 110,000
Equipment 260,000 200,000
Accumulated Depreciation-Equipment -69,000 -42,000
Total $597,000 $545,000
Liabilities and Stockholders’ Equity
Accounts payable $34,000 $47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 214,000 164,000
Retained earnings 199,000 134,000
Total $597,000 $545,000
Additional information:
1. Net income for 2014 was $125,000.
2. Cash dividends of $60,000 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock .
Question 18
Chris Spear invested $15,000 today in a fund that earns 8% compounded annually. (Use the tables below .)
To what amount will the investment grow in 3 years? To what amount would the investment grow
in 3 years if the fund earns 8% annual interest compounded semiannually? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.)
Question 19
Amy Monroe wants to create a fund today that will enable her to withdraw $25,000 per year for 8 years, with the first withdrawal to take place 5 years from today. (Use the tables below.)
If the fund earns 8% interest, how much must Amy invest today? (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.)
* Question 20
Zach Taylor is settling a $20,000 loan due today by making 6 equal annual payments of $4,727 .53. (Use the tables below .)
What payments must Zach Taylor make to settle the loan at the same interest rate but with
the 6 payments beginning on the day the loan is signed? (Round factor values to 5 decimal places,
e.g. 1.25124 and final answers to O decimal places, e.g. 458,581.)
Question 21
Alan Jackson invests $20,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 years. At the end of the 8 years, Alan withdraws the accumulated amount of money.
Compute the amount Alan would withdraw assuming the investment earns simple interest. (Round answers to O decimal places, e.g. 458,581.)
Question 24
Morlan Corporation is preparing its December 31, 2014, financial statements . Two events that occurred between December 31, 2014, and March 10, 2015, when the statements were issued, are described below.
1. A liability, estimated at $160,000 at December 31, 2014, was settled on February 26, 2015, at 170,000
2. A flood loss of $80,000 occurred on March 1, 2015.
What effect do these subsequent events have on 2014 net income
Question 27
Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are
$144,000, 000 and $99,000,000, respectively. Short-term interest rates are expected to average 10% . If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year .
Compute its expected cost savings for the coming year.
Question 30
At December 31, 2014, Grinkov Corporation had the following account balances.
Installment Accounts Receivable, 2013 $65,000
Installment Accounts Receivable, 2014 110,000
Deferred Gross Profit, 2013 23,400
Deferred Gross Profit, 2014 41,800
Most of Grinkov’s sales are made on a 2-year installment basis.
Indicate how these accounts would be reported in Grinkov’s December 31, 2014, balance sheet. The 2013 accounts are collectible in 2015, and the 2014 accounts are collectible in 2016
