Chapter 2
Question 15
Input area:
Output area:
Income Statement
Interest expense 4,900
Addition to retained earnings 5,300$
Dividends paid 1,800$
Interest expense 4,900$
Tax rate 35%
Chapter 2
Question 16
Input area:
Output area:
Accounts receivable 105,000 Notes payable 160,000
Current assets 525,000$ Long-term debt 845,000
Tangible net fixed assets 1,620,000$
Balance sheet as of Dec. 31, 2011
Intangible net fixed assets 630,000
Accounts payable 210,000
Accounts receivable 105,000
Tangible net fixed assets 1,620,000
Notes payable 160,000
Accumulated retained earnings 1,278,000
Long-term debt 845,000
Chapter 2
Question 17
Input area:
Output area:
Total liabilities 5,800$
Chapter 2
Question 18
Input area:
Output area:
Corporation Growth:
With a marginal tax rate of 34%, the tax on an
Corporation Income:
With a marginal tax rate of 34%, the tax on an
The tax bills on an additional $10,000 are the same
because each firm has a marginal tax rate of 34%,
Corporation growth taxable income 76,000$
Corporation income taxable income 7,600,000
Taxable income
0 – 50,000 15%
50,001 – 75,000 25%
75,001 – 100,000 34%
100,001 – 335,000 39%
335,001 – 10,000,000 34%
10,000,001 – 15,000,000 35%
15,000,001 – 18,333,333 38%
18,333,334 + 35%
Chapter 2
Question 19
Input area:
Output area:
Income Statement
Depreciation expense 140,000
Interest expense 85,000
Taxes (35%) 0
Administrative and selling expenses 110,000
Depreciation expense 140,000
Interest expense 85,000
Tax rate 35%
Chapter 2
Question 20
Input area:
Output area:
Cash flow from assets 130,000$
Cash to from stockholders 63,000$
Cash flow to creditors 67,000$
From Problem 19:
Operating Cash Flow 130,000$
New information:
Cash dividend 63,000$
New investment in net fixed income 0
New investment in net working capital 0
New stock issued during year 0
Net capital spending 0
Net new equity 0
Chapter 2
Question 21
Input area:
Output area:
Income Statement
Depreciation expense 4,860
Interest expense 2,190
Taxes (34%) 357
b. Operating cash flow 7,743$
d. Cash flow to creditors 2,190$
The firm has positive earnings in the accounting sense (NI>0) and had positive cash flow
from operations. The firm invested $816 $8,640
in new fixed assets. The firm had to raise $1,713 from its
stakeholders to support this new investment. It accomplished this by raising $5,463
in the form of equity. After paying out $1,560 of this in the form of dividends to
shareholders and $2,190 in the form of interest to creditors,
for investment.
Cost of goods sold 19,260
Depreciation expense 4,860
Interest expense 2,190
Dividends paid 1,560
New debt issued 0
2010 Net fixed assets 16,380$
2010 Current assets 5,760
2010 Current liabilities 3,240
2011 Net fixed assets 20,160$
2011 Current assets 7,116
2011 Current liabilities 3,780
Tax rate 34%
Chapter 2
Question 22
Input area:
Sales 11,592$
Output area:
Income Statement
Depreciation expense 1,033.00
Interest expense 294.00
Taxes (35%) 1,701.00
Cost of goods sold 5,405$
Depreciation expense 1,033$
Interest expense 294$
2010 Current assets 914$
2010 Net fixed assets 3,767$
2010 Current liabilities 365$
2010 Long-term debt 1,991$
2011 Current assets 990$
2011 Net fixed assets 4,536$
2011 Current liabilities 410$
2011 Long-term debt 2,117$
2011 New fixed assets purchased 1,890$
2011 New long-term debt 378$
Tax rate 35%
Chapter 2
Question 23
Chapter 2
Question 24
Input area:
Output area:
Chapter 2
Question 25
Input area:
2010 2011
Output area:
Net fixed assets 50,888$ Owners’ equity 53,397$
Accounts receivable 9,427 Notes payable 1,147
Current assets 31,181$
Net fixed assets 54,273$ Owners’ equity 55,027$
Other expenses 946.00
Addition to retained earnings 1,368.26
2010 Income Statement
Other expenses 824.00
Balance sheet as of Dec. 31, 2011
Balance sheet as of Dec. 31, 2010
2011 Income Statement
Cost of goods sold 3,979 4,707
Other expenses 946 824
Accounts receivable 8,034 9,427
Short-term notes payable 1,171 1,147
Long-term debt 20,320 24,636
Net fixed assets 50,888 54,273
Accounts payable 4,384 4,644
Tax rate 34% 34%
Chapter 2
Question 26
Input area:
2010 2011
Output area:
Addition to retained earnings 1,512.38
Operating cash flow 5,792.38$
Change in NWC 2,561.00
Net capital spending 5,121.00
Net new long-term debt 4,316.00$
Net new equity 117.62$
Cost of goods sold 3,979 4,707
Other expenses 946 824
Accounts receivable 8,034 9,427
Short-term notes payable 1,171 1,147
Long-term debt 20,320 24,636
Net fixed assets 50,888 54,273
Accounts payable 4,384 4,644
Tax rate 34% 34%
From Problem 25:
Owners’ equity 53,397$ 55,027$