Chapter 4 Accounting
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Date Submitted: 10/21/2015 07:15 PM
SOLUTIONS CHAPTER 4
P4-4.Depreciation and accounting cash flow
LG 1, 2; Intermediate
a.Operating cash flow
Sales revenue$400,000
Less:Total costs before depreciation,
interest, and taxes 290,000
Depreciation expense 34,200 (= 0.19 ´ $180,000)
Earnings before interest and taxes$ 75,800
Less: Taxes at 40% 30,320
Net profit after taxes$ 45,480
Plus: Depreciation 34,200
Cash flow from operations$ 79,680
b.Depreciation and other noncash charges serve as a tax shield against income, increasing annual cash flow.
P4-7.Cash receipts
LG 4; Basic
April
May
June
July
August
Sales
$65,000
$60,000
$70,000
$100,000
$100,000
Cash sales (0.50)
$32,500
$30,000
$35,000
$ 50,000
$ 50,000
Collections:
Lag 1 month (0.25)
16,250
15,000
17,500
25,000
Lag 2 months (0.25)
16,250
15,000
17,500
Total cash receipts
$66,250
$ 82,500
$ 92,500
P4-8.Cash disbursement schedule
LG 4; Basic
February
March
April
May
June
July
Sales
Disbursements
$500,000
$500,000
$560,000
$610,000
$650,000
$650,000
Purchases (0.60)
$300,000
$336,000
$366,000
$390,000
$390,000
Cash
36,600
39,000
39,000
1 month delay (0.50)
168,000
183,000
195,000
2 month delay (0.40)
120,000
134,400
146,400
Rent
8,000
8,000
8,000
Wages & salary
Fixed
6,000
6,000
6,000
Variable
39,200
42,700
45,500
Taxes
54,500
Fixed assets
75,000
Interest
30,000
Cash dividends
12,500
Total
Disbursements
$465,300
$413,100
$524,400
P4-9.Cash budget–basic
LG 4; Intermediate
March
April
May
June
July
Sales
$50,000
$60,000
$70,000
$80,000
$100,000
Cash sales (0.20)
$10,000
$12,000
$14,000
$16,000
$...
