GARRISON MANAGERIAL ACCOUNTING CONNECT
17th Edition
ISBN: 9781264962938
Author: Garrison
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Textbook Question
Chapter 15.A, Problem 2E
EXERCISE 14A-2 Net Cash Provided by Operating Activities LO14-4
Wiley Company’s income statement for Year 2 follows:
The company’s selling and administrative expense for Year 2 includes $7,500 of
Required:
- Using the direct method, convert the company’s income statement to a cash basis.
- Assume that during Year 2 Wiley had a $9,000 gain on sale of investments and a $3,000 loss on the sale of equipment. Explain how these two transactions would affect your computations in (1) above.
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KIARA LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
ASSETS
Property, plant and equipment (cost)
Accumulated depreciation
Long-term investments
Inventory
Accounts receivable
Company tax paid in advance
Bank
EQUITY AND LIABILITIES
2024
2023
R
R
2 490 000
1 620 000
(630 000)
660 000
1 050 000
1 230 000
30 000
(480 000)
450 000
1 290 000
900 000
0
750 000
660 000
5 580 000
4 440 000
Ordinary share capital
2 700 000
2 000 000
Retained income
1 500 000
1 158 000
Long-term loan from Kip Bank (15%)
900 000
1 000 000
Accounts payable
480 000
228 000
Company tax payable
0
54 000
5 580 000
4 440 000
ADDITIONAL INFORMATION
All purchases and sales are on credit.
Interim dividends paid during the year amounted to R150 750.
Credit terms of 3/10 net 60 days are granted by creditors.
Accounting Question
REQUIRED
Study the information given below and answer the following questions. Where discount factors are required
use only the four decimals present value tables that appear after the formula sheet or in the module guide.
Ignore taxes.
5.1 Calculate the Accounting Rate of Return on average investment of the second alternative
(expressed to two decimal places).
5.2 Determine which of the two investment opportunities the company should choose by
calculating the Net Present Value of each alternative. Your answer must include the
calculation of the present values and NPV.
5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal
places). Your answer must include two net present value calculations (using consecutive
rates/percentages) and interpolation.
INFORMATION
The management of Bentall Incorporated is considering two investment opportunities:
(5 marks)
(9 marks)
(6 marks)
The first alternative involves the purchase of a new machine for R900 000 which…
Chapter 15 Solutions
GARRISON MANAGERIAL ACCOUNTING CONNECT
Ch. 15.A - Prob. 1ECh. 15.A - EXERCISE 14A-2 Net Cash Provided by Operating...Ch. 15.A - Prob. 3ECh. 15.A - Prob. 4ECh. 15.A -
PROBLEM 14A-5 Prepare and Interpret a Statement...Ch. 15.A - Prob. 6PCh. 15.A - PROBLEM 14A-7 Prepare and Interpret a Statement of...Ch. 15 - Prob. 1QCh. 15 - Prob. 2QCh. 15 - Prob. 3Q
Ch. 15 - Prob. 4QCh. 15 - Prob. 5QCh. 15 - Prob. 6QCh. 15 - Prob. 7QCh. 15 - Prob. 8QCh. 15 - Prob. 9QCh. 15 -
14-10 If the Accounts Receivable balance...Ch. 15 - Prob. 11QCh. 15 - Prob. 12QCh. 15 - Prob. 1F15Ch. 15 - Ravenna Company is a merchandiser that uses the...Ch. 15 - Prob. 3F15Ch. 15 - Prob. 4F15Ch. 15 - Prob. 5F15Ch. 15 - Prob. 6F15Ch. 15 - Ravenna Company is a merchandiser that uses the...Ch. 15 - Prob. 8F15Ch. 15 - Prob. 9F15Ch. 15 - Prob. 10F15Ch. 15 - Prob. 11F15Ch. 15 - Prob. 12F15Ch. 15 - Prob. 13F15Ch. 15 - Prob. 14F15Ch. 15 - Prob. 15F15Ch. 15 - Prob. 1ECh. 15 - EXERCISE 14-2 Net Cash Provided by Operating...Ch. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - Prob. 6ECh. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14P
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