Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 2, Problem 11P
To determine
Calculate the return on common equity.
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Portions of the financial statements for Software Associates are provided below.
SOFTWARE ASSOCIATESIncome StatementFor the year ended December 31, 2021
Net sales
$670,000
Expenses:
Cost of goods sold
$400,000
Operating expenses
126,000
Depreciation expense
32,600
Income tax expense
47,000
Total expenses
605,600
Net income
$64,400
SOFTWARE ASSOCIATES
Selected Balance Sheet Data
December 31, 2021, compared to December 31, 2020
Decrease in accounts receivable
$9,600
Decrease in inventory
12,600
Increase in prepaid rent
2,600
Decrease in salaries payable
3,600
Increase in accounts payable
6,600
Increase in income tax payable
7,600
Required:
Prepare the operating activities section of the statement of cash flows for Software Associates using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)
SOFTWARE ASSOCIATES
Statement of Cash Flows (partial)
For the Year…
Develop short definitions for the following terms: balance sheet, income statement, and fundamental accounting equation
Chapter 2 Solutions
Contemporary Engineering Economics (6th Edition)
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