Chapter 1 (introduction to Corporate Financelj Chapter 2 (Financial Statements)

Question

Chapter 1 (introduction to Corporate Financelj Chapter 2 (Financial Statements) For questions #6-18, refer to the following financial information for Gannon Insurance. ' POSITIVE RATING. PLEASE ALLCALCULATONGCLEARESHOLN TOEARN 2016 2017 BALANCE SHEETs: Cash Accounts Receivable Inventory Fixed Asscts, net Total Assets 120,000 520,000 305,000 410,000 1,355,000 160,000 620,000 290,000 510.000 1,580,000 Liabilities and Equity: Accounts Payable Long-term Debt Common Stock Retained Earnings Total Liabilities and Equity 350,000 500,000 50,000 455.000 1,355,000 S375,000 625,000 75,000 505,000 1,580,000 INCOME STATEMENT: Revenue Cost of Goods Sold General and Administrative Depreciation Expense Earnings Before Interest and Taxes Interest Expense Pretax Net Income Income Taxes 3,500,000 2,275,000 515,000 120,000 590,000 40,000 550,000 167,000 383,000 Net Income 14. Assuming that Gannon didn't dispose of any of its fixed assets, how much new capital spending did it incur in 2017?

Explanation / Answer

New Capital Spending=Net fixed Assets in 2017+Depreciation Expense-Net FIxed Assets in 2016=510000+120000-410000=220000

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