Answer:
a. The items that affect Investing Activities (IA) are as follows:
Cash paid to purchase land 90,000
Cash received from sale of equipment 17,000
b. The items that affect Financing Activities (FA) are as follows:
Cash paid as dividends 29,000
Cash paid to retire bonds payable at par 60,000
Cash received from issuance of common stock 35,000
Explanation:
Using the items that affect the Investing Activities (IA) and the Financing Activities (FA) in the answer above, the indirect cash flow statements can be completed as follows:
Cash Flow statement - indirect method
For the Year Ended December 31, ...
Details $ $
Net Income 76,000.00
Gain on Sale of Equipment (4,000.00)
Depreciation 29,000.00
Amortization Expense 6,000.00
Adjustments
Decrease in inventory 13,000.00
Gain On sale of equipment (4,000.00)
Decrease In accrued Liability (3,000.00)
Increase in prepaid expenses (2.000.00)
Increase in Accounts Payable 9,000.00
Cash flows from operating activities 120,000.00
Investing Activities (IA)
Cash paid to purchase land (90,000.00)
Cash received from sale of equipment 17,000.00
Cash flows from investing activities 73,000.00
Financing Activities (FA)
Cash paid as dividends (29,000.00)
Cash paid to retire bonds payable at par (60,000.00)
Cash from common stock issued 35,000.00
Cash flows from financing activities 54,000.00
Net cash outflows for the year (7,000.00)
Cash balance, January 1 22,000.00
Cash balance, December 31 15,000.00
The Aleander Company plans to issue $10,000,000 of 20-year bonds at par next June, with semiannual interest payments. The company's current cost of debt is 10 percent. However, the firm's financial manager is concerned that interest rates will increase in coming months, and has decided to take a short position in U. S. government t-bond futures. See the settlement data below for t-bond futures. (Note: One standard futures contract is $100,000).
a. Calculate the present value of the corporate bonds if rates increase by 2 percentage points.
b. Calculate the gain or loss on the corporate bond position.
c. Calculate the number of contracts required to cover the bond position. Then calculate the current value of the futures position.
d. Calculate the implied interest rate based on the current value of the futures position.
e. Interest rates increase as expected, by 2 percentage points. Calculate the present value of the futures position based on the rate calculated above plus the 2 points.
f. Calculate the gain or loss on the futures position.
g. Calculate the overall net gain or loss.
h. Is this problem an example of a perfect hedge or a cross hedge? Is it an example of speculation or hedging? Why?
Delivery Month Open High Low Settle Change Open Interest
(1) (2) (3) (4) (5) (6) (7)
Dec 103'14 103'14 102'11 102'17 -6 678,000
Mar 102'11 102'23 100'28 101'01 -5 135,855
June 101'14 101'26 100'02 100'12 -5 17,255
I have tried to explain it in extremely simple words and kept it precise too. I have made an excel file and compiled the answer in that clearly. All the parts are clearly mentioned. Please download the document and understand clearly. All the parts are solved independantly. Please find the attached file. Thanks.
Revenue and expense data for Bluestem Company are as follows:
Year 2 Year 1
Administrative expenses $37,720 $20,300
Cost of goods sold 360,000 319,900
Income tax 41,000 32,200
Sales 820,000 700,000
Selling expenses 154,160 109,900
Required:
Prepare a comparative income statement, with vertical analysis, stating each item for both years as a percent of sales.
Answer and Explanation:
The preparation of a comparitive income statement, with vertical analysis, stating each item for both years as a percent of sales is prepared below with the help of the attached spreadsheet:-
The formula that we have used is shown below:-
Gross profit percent = Gross profit / Sales revenue
Cost of goods sold percent = Cost of goods sold / Sales revenue
and in a similar way operating expenses items.