Hammett, Inc., has sales of $19,630, costs of $9,400, depreciation expense of $2,070, and interest

Hammett, Inc., has sales of $19,630, costs of $9,400, depreciation expense of $2,070, and interest expense of $1,560. Assume the tax rate is 30 percent.  

Required:

What is the operating cash flow? (Do not include the dollar sign ($).)

 

Operating cash flow

$

 

Explanation:

To calculate the OCF, we first need to construct an income statement. The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get:

Income statement
Sales	$	19,630
Costs		9,400
Depreciation		2,070
EBIT	$	8,160
Interest		1,560
Taxable income	$	6,600
Taxes (30%)		1,980
Net income	$	4,620

Now we can calculate the OCF, which is:

OCF = EBIT + Depreciation – Taxes

OCF = $8,160 + 2,070 – 1,980

OCF = $8,250

Lifeline, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest

Lifeline, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest expense of $35,500, and a tax rate of 40 percent.

Required:

What is the net income for this firm? (Do not include the dollar sign ($).)

Net income

$

 

Explanation:

The income statement starts with revenues and subtracts costs to arrive at EBIT. We then subtract out interest to get taxable income, and then subtract taxes to arrive at net income. Doing so, we get:

 

Income statement
Sales	$	590,000
Costs		268,000
Depreciation		68,500
EBIT	$	253,500
Interest		35,500
Taxable income	$	218,000
Taxes		87,200
Net income	$	130,800

Wheeler Corporation’s most recent income statement follows:

Wheeler Corporation’s most recent income statement follows:

	Total		Per Unit
Sales (8,000 units)	$	208,000	$	26.00
Variable expenses		144,000		18.00
Contribution margin		64,000	$	8.00
Fixed expenses		56,000
Net operating income	$	8,000

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently):

1.	The sales volume increases by 50 units. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Contribution Income Statement
	Total
Sales	$ 209,300
Variable expenses	144,900
Contribution margin	64,400
Fixed expenses	56,000
Net operating income (loss)	$ 8,400

2.	The sales volume declines by 50 units. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Contribution Income Statement
	Total
Sales	$ 206,700
Variable expenses	143,100
Contribution margin	63,600
Fixed expenses	56,000
Net operating income (loss)	$ 7,600

3.	The sales volume is 7,000 units. (Input all amounts as positive values except losses which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Contribution Income Statement
	Total
Sales	$ 182,000
Variable expenses	126,000
Contribution margin	56,000
Fixed expenses	56,000
Net operating income (loss)	$ 0

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company's records show the following items and amounts.

Exercise 1-15 Preparing a statement of retained earnings L.O. P2

On October 1, Natalie King organized Real Solutions, a new consulting firm. On October 31, the company's records show the following items and amounts.

Cash	$	11,000		Cash dividends	$	2,000
Accounts receivable		13,000		Consulting fees earned		15,000
Office supplies		23,375		Rent expense		2,700
Land		36,000		Salaries expense		6,000
Office equipment		18,000		Telephone expense		760
Accounts payable		41,250		Miscellaneous expenses		580
Common stock		57,165

Using the above information to prepare an October statement of retained earnings for Real Solutions. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

REAL SOLUTIONS Statement of Retained Earnings For Month Ended October 31
Retained earnings, Oct. 1	$ 0
Add: Net income	4,960
	4,960
Less: Cash dividends	2,000
Retained earnings, Oct. 31	$ 2,960

Explanation:

REAL SOLUTIONS Income Statement For Month Ended October 31
Revenues:
Consulting fees earned				$	15,000
Expenses:
Salaries expense	$	6,000
Rent expense		2,700
Miscellaneous expenses		580
Telephone expense		760
Total expenses					10,040
Net income				$	4,960