QUESTION 8 1.333 points Save Answer A firm reported Net Fixed Assets of $2,674,0

Question

QUESTION 8 1.333 points Save Answer A firm reported Net Fixed Assets of $2,674,000 on its end-of year 2014 balance sheet and Net Fixed Assets of $3,192,000 on its end-of year 2015 balance sheet. If the depreciation expense of the firm's 2015 income statement was $520,000, what was the firm's net capital spending in 2015? O A. $518,000 O B. $2468,000 C.$3,194,0o0 O D. $1,038,000 QUESTION 9 1.333 polnts Save Answer A firm's balance sheets as of the December 31, 2015 and 2016 show the following items: 2015: Cash = $9,916,500; Account Receivable = $9,000,000; Inventory $4,500,000; Gross Fixed Assets = $10,972,000; Accumulated Depreciation- $1,243,000; Retained Earnings $1,967,500; Capital Surplus $8,600,000; Common Stock ($0.50 par) $4,500,000; Notes Payable $8,921,000 Long term debt- $2,500,000; Accounts Payable $6,657,000. 2016: Cash = $11,098,000; Account Receivable-$7,600,000; Inventory = $5,200,000; Gross Fixed Assets $13,774,000; Accumulated Depreciation = $1,675,000; Retained Earnings $1,967,500; Capital Surplus $11,300,000; Common Stock ($0.50 par) $4,800,000; Notes Payable $7,773,000; Long term debt $1,500,000; Accounts Payable $6,132,000 Calculate the change in net working capital (NWC) in 2016 A. $1,804,600 B. $3,272,800 O C.$2,154,500 D. $9,993,000

Explanation / Answer

1.

Fixed assets at the end of the year 2015 = 3192000

fixed assets at the beginning of the year 2015=2674000

Dep =520000

Net capital spending = Fixed assets at the end of the year – fixed assets at the beginning of the year + depreciation

= 3192000 - 2674000 + 520000

= 1038000

Hence D is the correct option

2.

Current assets for 2015

Cash = 9916500

Account Receivable = 9000000

Inventory = 4500000

Total current assets for 2015 = 9916500 + 9000000 +4500000 = 23416500

Current liabilities 2015

Notes Payable = 8921000

Accounts payable = 6657000

Total current liabilities = 8921000 + 6657000 = 15578000

NEt working capital for 2015 = Total current assets for 2015 - Total current liabilities = 23416500 -15578000

Net working capital for 2015 = 7838500

Current assets for 2016

Cash = 1109800

Account Receivable = 7600000

Inventory = 5200000

Total current assets for 2016 = 1109800 + 7600000+520000 = 23898000

Current liabilities 2016

Notes Payable = 7773000

Accounts payable = 6132000

Total current liabilities = 7773000 + 6132000 = 13905000

Net working capital for 2016 = 23898000 -13905000 = 9993000

Change in working capital in 2016 = Net working capital for 2016 - Net working capital for 2015

= 7838500 - 9993000 = 2154500

Option C is correct option

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