Company L sold an inventory item to Firm M for $40,000. Company L’s marginal tax rate is 21 percent. In each of the following cases. Required: a. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $10,000 cash and its note for $30,000. The note is payable two years from the date of sale. Company L’s basis in the inventory item was $15,700. b. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $5,000 cash and its note for $35,000. The note is payable two years from the date of sale. Company L’s basis in the inventory item was $47,000. c. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $40,000 cash. Company L’s basis in the inventory item was $18,000. d. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment consisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
Company L sold an inventory item to Firm M for $40,000. Company L’s marginal tax
rate is 21 percent. In each of the following cases.
Required:
a. Compute Company L’s after-tax
consisted of $10,000 cash and its note for $30,000. The note is payable two years
from the date of sale. Company L’s basis in the inventory item was $15,700.
b. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $5,000 cash and its note for $35,000. The note is payable two years
from the date of sale. Company L’s basis in the inventory item was $47,000.
c. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $40,000 cash. Company L’s basis in the inventory item was $18,000.
d. Compute Company L’s after-tax cash flow from the sale when Firm M’s payment
consisted of $40,000 cash. Company L’s basis in the inventory item was $44,000
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INTRODUCTION:
The amount of cash made or spent during a certain time period, often spanning one or more reporting periods, is known as net cash flow. This idea is used to evaluate a company's potential to create cash in the near term, which is regarded to be its financial viability.
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