ADMS 4900 Lecture Notes - Lecture 14: Gross Profit, Earnings Before Interest And Taxes, Net Income

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byzantiumbeaver144

30 Nov 2017

School

York University

Department

Administrative Studies

Course

ADMS 4900

Professor

Barry O' Brien

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Document Summary

Initial investment ( d ) ( e ) Nakoi es la que gana la mayor a de las catego r as. Npv recom mend dekota becaus e the annual cash flows and market value at the end of. 7 years are higher than the same of. Irr and profitab ility idex gave differen t results becaus e these techniq ues are influen ced by initial invest ments. Aarr are differen t becaus e these techniq ues ignore the time value of money and timing of cash flows. Disadva ntages of paybac k method ( a ) Payback method fails to conside r the pattern of cash flows; it ignores the time value of money. Payback method is easy to calculat e and simple to underst and. Payback method is to an improve ment in. Advant ages of paybac k method i ii.

Related Questions

The following data were taken from the records of Griggs Companyfor December 2016:

Administrative expenses	$100,800
Cost of goods sold (at standard)	550,000
Direct materials price variance-unfavorable	1,680
Direct materials quantity variance-favorable	560
Direct labor rate variance-favorable	1,120
Direct labor time variance-unfavorable	490
Variable factory overhead controllable variance-favorable	210
Fixed factory overhead volume variance-unfavorable	3,080
Interest expense	2,940
Sales	868,000
Selling expenses	125,000

Prepare an income statement for presentation to management.Enter all amounts as positive numbers except favorable variances.Use a minus sign to indicate favorable variances. Refer to the listof Labels and Amount Descriptions for the exact wording of theanswer choices for text entries.

Labels

In CengageNOW, a Label is a text entry that does not have anamount associated with it.

Less variances from standard cost

Operating expenses

Other expense

Amount Descriptions

In CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it.

Administrative expenses

Cost of goods sold-at standard

Depreciation of plant and equipment

Direct labor rate

Direct labor time

Direct materials price

Direct materials quantity

Fixed factory overhead volume

Gross profit

Gross profit-at standard

Income before income tax

Income from operations

Insurance and property taxes

Interest expense

Loss before income tax

Loss from operations

Sales

Selling expenses

Total variances from standard cost

Variable factory overhead controllable

Griggs Company

Income Statement

For the Month Ended December 31, 2016

1
2
3
4
5	Favorable	Unfavorable
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Cash flow information: Direct and indirectmethods

The comparative year-end balance sheets

20X5

20X4

Increase / Decrease)

Current assets

Cash

$55,400

$35,200

$20,200

Accounts receivable (net)

83,800

88,000

-4,200

Inventory

243,400

233,800

9,600

Prepaid expenses

25,400

24,200

1,200

Current liabilities

Accounts payable

$123,600

$140,600

($17,000)

Taxes payable

43,600

49,200

-5,600

Interest payable

9,000

6,400

2,600

Accrued liabilities

38,800

60,400

-21,600

Note payable

44,000

%u2014

44,000

SIGN GRAPHICS INC.
Income Statement
for the Year Ended December 31,20x5

Sales		$713,800
Less: Cost of goods sold		323,000
Gross profit		$390,800

Less: Selling &administrative expenses	$186,000
Depreciation expense	17,000
Interestexpense	27,000	230,000

Add: gain on sale of land		$160,800
		21,800
Income before taxes		$182,600
Income taxes		36,800
Net income		$145,800
		Other data: Long-term investments werepurchased for cash at a cost of $74,600. Cash proceeds from the sale ofland totaled $76,200. Store equipment of $44,000 waspurchased by signing a short-term note payable. Also, a $150,000telecommunications system was acquired by issuing 3,000 shares ofpreferred stock. A long-term note of $49,400 wasrepaid. Twenty thousand shares of commonstock were issued at $5.19 per share. The company paid cash dividendsamounting to $128,600.

Instructions:

Prepare the operating activitiessection of the company's statement of cash flows, assuming useof:

The direct method.

The indirect method.

Prepare the investing and financingactivities sections of the statement of cash flows.

plummuskrat754

Statement of Cash Flows
Angela's Cleaning Consortium			Seymour-Johnson, Inc.
Comparative Balance Sheet			Income Statement
December 31, 2020 and 2019			For the Year Ended December 31, 2020
	2020	2019	Net sales	$ 386,000
ASSETS			Cost of goods sold	(212,000)
Current assets			Gross profit	174,000
Cash	$ 66,500	$ 62,000	Operating expenses
Accounts receivable	95,000	113,000	Salaries and wages expense	(66,000)
Merchandise inventory	172,000	165,000	Depreciation expense	(25,000)
Total current assets	333,500	340,000	Other operating expenses	(28,000)
Long-term investments			Income from operations	55,000
Investment in Walking Dead Co.	-	50,000	Other revenues and gains
Property, buildings, and equipment	507,000	304,000	Interest revenue	15,000
Less: Accumulated depreciation	(59,500)	(42,000)	Dividend revenue	9,700
Total assets	$ 781,000	$ 652,000	Gain on disposal of plant assets	12,000
Liabilities and Stockholders' Equity			Other expenses and losses
Current liabilities			Interest expense	(15,000)
Accounts payable	$ 144,000	$ 175,000	Income before income taxes	76,700
Accrued liabilities	17,000	47,000	Income tax expense	(14,000)
Total current assets	161,000	222,000	Net Income	$ 62,700
Long-term Liabilities
Notes payable, long-term	160,000	90,000
Totalliabilities	321,000	312,000
Stockholders' equity
Common stock	370,000	250,000
Retained earnings	140,000	90,000
Treasury stock	(50,000)	-
TotalStockholdersâ Equity	460,000	340,000
Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000

Additional Information:
A. Sold plant assets with a cost of$75,000 and accumulated depreciation of $7,500,
yielding again of disposal of plant assets of $12,000.
B. Purchased plant assets by payingcash.
C. Issued Notes Payable for Cash.
D. Sold investment in Walking Dead Coat cost (zero gain/loss).
E. Issued Common Stock for Cash.
F. Purchased Treasury Stock for Cash.

Requirements:
Prepare, in good form, a Statement of Cash Flowsusing the indirect method.

beigesardine151

ADMS 4900 Lecture Notes - Lecture 14: Gross Profit, Earnings Before Interest And Taxes, Net Income

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