Consider the following abbreviated financial statements for Cabo Wabo, Inc.: (En

Question

Consider the following abbreviated financial statements for Cabo Wabo, Inc.: (Enter your answer as directed, but do not round intermediate calculations.) CABO WABO, INC. Partial Balance Sheets as of December 31, 2013 and 2014 2013 2014 2013 2014 Liabilities and Owners' Equity Current assets Net fixed assets $ 2,681 2,836 Current liabilities 12,383 12,943 Long-term debt $ 1,143 $ 1,685 6,713 7,854 O WABO, INC 14 Income Sta $39,910 20,010 3,381 630 Sales Costs Interest paid Requirement 1 What is owners' equity for 2013 and 2014? 2013 2014 Requirement 2: What is the change in net working capital for 20147 (Negative amount should be indicated by a minus sign.) in net working capital t3: In 2014, Cabo Wabo purchased $5,666 in new fixed assets. The tax rate is 40 percent (a) How much in fixed assets did Cabo Wabo sell? (Round your answer to the nearest whole dollar amount (e.g., 32).) Fixed assets sold

Explanation / Answer

Requirment 1 Owners Equity 2013 7208 2014 6249 Owners Equity=Total Asset -Total Liabilities 2013 2014 Total Asset 15064 15779 Total Liabilities 7856 9539 Owners Equity 7208 6240 Requirment 2 2013 2014 current Assets 2681 2836 Current Liabilities 1143 1685 Working capital 1538 1151 Change in Net Working Capital=1538-1151 -387 Requirment 3 How Much Fixed assets did Cabo Wabo Sell Net capital spending = Net fixed assets 2014 – Net fixed assets 2013 + Depreciation Net capital spending=12943-12383+3381=3941 Net capital spending = Fixed assets bought – Fixed assets sold 3941=5666-Fixed assets sold Fixed assets sold=5666-3941=1725 OCF = EBIT + Depreciation – Taxes =16519+3381-6355.6=13544.40 Cash flow from assets = OCF – Change in NWC – Net capital spending. =13544.40-(-387)-3941=9990 Cash Flow to Creditors =Interest Paid-Net New Borrowing Cash Flow to Creditors=630-(7854-6713)=-511 Debt Retired=6713+1720-7854=$579 Sales 39910 Cost 20010 Depreciation 3381 EBIT 16519 Interest 630 PBT 15889 Tax 40% 6355.6 Net Income 9533.4

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