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Problem 11-11 Capital budgeting criteria: mutually exclusive projects Project S costs $12,000 and its expected cash flows would be $6,000 per year for 5 years. Mutually exclusive Project L costs $38,500 and its expected cash flows would be $9,300 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend? Select the correct answer.I. Project S, since the NPVS > NPVL.II. Neither S or L, since each project\'s NPV < 0.III. Both Projects S and L, since both projects have IRR\'s > 0.IV. Project L, since the NPVL > NPVS.V. Both Projects S and L, since both projects have NPV\'s > 0. Solution Project S should be selected as NPVS > NPVLProject SyearCash flowsPVF @ 12%PV0- 120001- 12000160000.8935358260000.7974782360000.7124272460000.6363816560000.56734029630P roject LyearCash flowsPVF @ 12%PV0-385001- 38500193000.8938304.9293000.7977412.1393000.7126621.6493000.6365914.8593000.567527 3.1-4973.5.

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Chapter 9:Capital Budgeting Techniques

Chapter 9:Capital Budgeting Techniques

FN6033-CORP FIN-LECTURE 5A.ppt

FN6033-CORP FIN-LECTURE 5A.ppt

1. Projects S and L have the following cash flows, and both have a.docx

1. Projects S and L have the following cash flows, and both have a.docx

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Chapter 9:Capital Budgeting Techniques

This document provides an overview and instructor resources for a chapter on capital budgeting techniques from the textbook "Principles of Managerial Finance" by Lawrence J. Gitman. The chapter covers net present value, internal rate of return, payback period, and risk-adjusted discount rates. It includes sample problems, spreadsheet templates, and a study guide for classroom use. The document lists learning goals, solutions to review questions, and solutions to sample problems calculating various capital budgeting metrics for multiple projects.

FN6033-CORP FIN-LECTURE 5A.ppt

This document discusses various capital budgeting techniques including:
- NPV, payback period, IRR, profitability index, and linear programming. It provides examples of how to calculate and properly apply each technique. It also discusses potential pitfalls of some techniques like multiple IRRs. Capital rationing constraints can require using the profitability index approach. A post audit reviews actual vs predicted results to improve future forecasts and operations.

1. Projects S and L have the following cash flows, and both have a.docx

This document discusses Citibank's e-business strategy for global corporate banking. It aimed to build a single web-enabled platform for corporate customers through initiatives like CitiDirect and TreasuryVision. It faced challenges in meeting the diverse needs of customers from SMEs to large MNCs. Core products included cash management, trade services, and treasury services. Cash management focused on efficient accounts payable, receivable, and liquidity management through online payment and receivables solutions.

Chapter 09 Capital Budgeting

This document discusses various capital budgeting techniques for evaluating long-term investment projects, including payback period, net present value (NPV), internal rate of return (IRR), and profitability index. It covers how to calculate and apply these methods to determine whether to accept or reject stand-alone and mutually exclusive projects. It also addresses challenges like unequal project lives and capital rationing.

The_Basics_of_Capital_Budgeting.ppt

This document discusses key concepts in capital budgeting. It defines capital budgeting as the analysis of potential additions to fixed assets involving large long-term expenditures important to a firm's future. The main steps to capital budgeting are estimating cash flows, assessing risk, determining the cost of capital, and calculating metrics like NPV and IRR to determine if projects should be accepted. It also discusses concepts like payback period, discounted payback period, mutually exclusive vs independent projects, and issues that can arise with projects having multiple internal rates of return.

Presentation Case Tri Star - Final

The group is analyzing an investment in Lockheed's Tri Star aircraft. They are considering whether to invest in the L-1011 Tri Star or its competitors, the DC-10 trijet and Airbus A-300B. The group will use capital budgeting techniques like net present value (NPV) and internal rate of return (IRR) to evaluate the investments and make a recommendation. Capital budgeting is the process used by businesses to determine whether projects such as new equipment or facilities provide sufficient returns to justify the capital expenditures required.

Chap008

This chapter discusses various capital budgeting techniques used to evaluate investment projects, including net present value (NPV), internal rate of return (IRR), payback period, and profitability index. It provides examples of calculating and applying each method, and highlights potential pitfalls in using some techniques like IRR. Financial calculators and Excel can be used to calculate metrics like NPV and IRR.

Multiple Project constraints

This document discusses multiple projects and constraints in project management. It covers constraints like project dependence, capital rationing, and project indivisibility that must be considered when evaluating multiple projects. Mathematical programming techniques like linear programming can be used to determine the optimal combination of projects under these constraints. Linear programming formulates the project selection problem with an objective function to maximize value and constraint equations for limited resources and project interdependencies. The optimal solution selects the feasible combination of projects with the highest value.

Capital budgeting

The document discusses various capital budgeting techniques used to evaluate long-term investment projects, including accounting rate of return, payback period, net present value (NPV), internal rate of return (IRR), and profitability index. It provides an example of using these methods to analyze potential expansion projects for a wireless company. While NPV is theoretically the best method, other techniques like IRR are also commonly used, but they may conflict with NPV in some cases due to problems related to project scale and timing.

Net Present Value - NPV

The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project.

Fin 2732 investment decisions

The document discusses various capital budgeting techniques for investment decision making including net present value (NPV), benefit-cost ratio (BCR), internal rate of return (IRR), payback period, and accounting rate of return (ARR). Examples are provided to illustrate how to use the techniques to evaluate potential projects. The key criteria are NPV (accept if greater than 0), BCR (accept if greater than 1), IRR (accept if greater than required rate of return), and payback period (accept if less than cutoff period).

Build a ModelBuild a Model112618Chapter10Problem23Gardial Fish.docx

Build a ModelBuild a Model11/26/18Chapter:10Problem:23Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows:Expected Net Cash FlowsTimeProject AProject B0($375)($575)1($300)$1902($200)$1903($100)$1904$600$1905$600$1906$926$1907($200)$0a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? @ 12% cost of capital @ 18% cost of capitalUse Excel's NPV function as explained in this chapter's Tool Kit. Note that the range does not include the costs, which are added separately.WACC =12%WACC =18%NPV A =NPV A =NPV B =NPV B =At a cost of capital of 12%, Project A should be selected. However, if the cost of capital rises to 18%, then the choice is reversed, and Project B should be accepted.b. Construct NPV profiles for Projects A and B.Before we can graph the NPV profiles for these projects, we must create a data table of project NPVs relative to differing costs of capital.Project AProject B0%2%4%6%8%10%12%14%16%18%20%22%24%26%28%30%c. What is each project's IRR?We find the internal rate of return with Excel's IRR function:IRR A =Note in the graph above that the X-axis intercepts are equal to the two projects' IRRs.IRR B =d. What is the crossover rate, and what is its significance?Cash flowTimedifferential012Crossover rate =34The crossover rate represents the cost of capital at which the two projects value, at a cost of capital of 13.14% is:
have the same net present value. In this scenario, that common net present567e. What is each project's MIRR at a cost of capital of 12%? At r = 18%? Hint: note that B is a 6-year project. @ 12% cost of capital @ 18% cost of capitalMIRR A =
DII Labs: Use Excel's MIRR function
DII Labs: The difference in cash flows between Project "A" and Project "B".
DII Labs: Net Present Value of "A" discounted at a WACC of 12%
DII Labs: The IRR for the Cash Flow Differential
DII Labs: Net Present Value of "A" discounted at a WACC of 18%
MIRR A =MIRR B =MIRR B =f. What is the regular payback period for these two projects?Project ATime period01234567Cash flow(375)(300)(200)(100)600$600$926($200)Cumulative cash flowIntermediate calculation for paybackPayback using intermediate calculationsProject BTime period01234567Cash flow-$575$190$190$190$190$190$190$0Cumulative cash flowIntermediate calculation for paybackPayback using intermediate calculationsPayback using PERCENTRANKOk because cash flows follow normal pattern.g. At a cost of capital of 12%, what is the discounted payback period for these two projects?WACC =12%Project ATime period01234567Cash flow-$375-$300-$200-$100$600$600$926-$200Disc. cash flowDisc. cum. cash flowIntermediate calculation for paybackPayback using intermediate calculationsProject BTime period0123456.

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Chapter 10 - Basics of Capital Budgeting.pptx

This document discusses key concepts in capital budgeting. It defines capital budgeting as the analysis of potential additions to fixed assets involving large long-term expenditures important to a firm's future. The key steps to capital budgeting are estimating cash flows, assessing risk, determining the cost of capital, and calculating metrics like NPV and IRR to determine if projects should be accepted. It also discusses the differences between independent and mutually exclusive projects, as well as normal and non-normal cash flows.

MEMORANDUM NPV

The document analyzes two potential projects - Project 1 involving retooling current production equipment and Project 2 involving expanding production capabilities by purchasing additional equipment - using net present value (NPV) and internal rate of return (IRR). Project 1 has a higher IRR of 18.293% compared to Project 1's 17.192%. The crossover rate, where the NPVs are equal, is 14.311%. Below this rate, Project 2 has a higher NPV, and above it Project 1 has a higher NPV. Project 1 is recommended due to its lower upfront costs and risk profile.

Cap budget [autosaved]

The document discusses various capital budgeting techniques used to analyze long-term investment projects. It describes methods like net present value (NPV), internal rate of return (IRR), payback period, and accounting rate of return. These techniques discount future cash flows to evaluate projects based on factors like profitability, risk, and investment recovery time. The document provides examples of applying these methods to hypothetical projects and comparing the results.

Capital Budgeting Rules 04

Capital Budgeting Techniques (Investment Decision Rules) (Measuring Return on Investment)
This document discusses various capital budgeting techniques used to evaluate long-term investment projects, including net present value (NPV), internal rate of return (IRR), payback period (PP), discounted payback period (DPP), and profitability index (PI). It provides examples of how to calculate these metrics and compares their strengths and weaknesses in accepting or rejecting investment projects.

Fina521 lecture 3_investment_criteria_2013-10-09-1

This document discusses different investment appraisal criteria including net present value (NPV), benefit-cost ratio, payback period, and internal rate of return (IRR). It provides examples and explanations of how to apply each criterion. It also notes some difficulties with using the IRR criterion, such as the potential for multiple IRRs for a single project or conflicting results when comparing projects of different sizes, lengths, or start times using IRR versus NPV.

Chapter 9:Capital Budgeting Techniques

Chapter 9:Capital Budgeting Techniques

FN6033-CORP FIN-LECTURE 5A.ppt

FN6033-CORP FIN-LECTURE 5A.ppt

1. Projects S and L have the following cash flows, and both have a.docx

1. Projects S and L have the following cash flows, and both have a.docx

Chapter 09 Capital Budgeting

Chapter 09 Capital Budgeting

The_Basics_of_Capital_Budgeting.ppt

The_Basics_of_Capital_Budgeting.ppt

Presentation Case Tri Star - Final

Presentation Case Tri Star - Final

Chap008

Chap008

Multiple Project constraints

Multiple Project constraints

Capital budgeting

Capital budgeting

Net Present Value - NPV

Net Present Value - NPV

Fin 2732 investment decisions

Fin 2732 investment decisions

Build a ModelBuild a Model112618Chapter10Problem23Gardial Fish.docx

Build a ModelBuild a Model112618Chapter10Problem23Gardial Fish.docx

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ch1 078ugytfg877t78tyu8yg8y87y87y87y89y89y89y8y.ppt

Chapter 10 - Basics of Capital Budgeting.pptx

Chapter 10 - Basics of Capital Budgeting.pptx

MEMORANDUM NPV

MEMORANDUM NPV

Cap budget [autosaved]

Cap budget [autosaved]

Capital Budgeting Rules 04

Capital Budgeting Rules 04

Fina521 lecture 3_investment_criteria_2013-10-09-1

Fina521 lecture 3_investment_criteria_2013-10-09-1

Problem 11-2Athe following are selected transactions of Blanco Com.pdf

Problem 11-2A
the following are selected transactions of Blanco Company. Blanco prepares financial statements
quarterly.
A. Prepare Journal entries for the listed transactions and events.
B. Post the accounts Notes Payable, Interest payable, and Interest Expense.
C. Show the balance sheet presentation of notes and interest payable at December 31.
D. What is the total interest expense for the year????Jan. 2Purchased merchandise on account
from Nunez Company, $28,800, terms 3/10, n/30. (Blanco uses the perpetual inventory
system.)Feb. 1Issued a 9%, 2-month, $28,800 note to Nunez in payment of account.March.
31Accrued interest for 2 months on Nunez note.Apr. 1Paid face value and interest on Nunez
note.July 1Purchased equipment from Marson Equipment apying $12,690 in cash and signing a
10%, 3 month, $50,400 note.Sept. 30Accrued interest for 3 months on Marson note.Oct 1Paid
face value and interest on Marson note.Dec. 1Borrowed $28,800 from the Paola Bank by issuing
a 3- month, 8% note with a face value of $28,800.Dec. 31Recognized interest expense for 1
month on Paola Bank note.
Solution
(‘A)- Journal Entries
Sr No
Date
Account Details and Explanation
Debit
Credit
(1)
Jan,2
Merchandise Inventory
28,800
Accounts Payable
28,800
To record the merchandise purchase
(2)
Feb,1
Accounts Payable
28,800
Notes Payable
28,800
To record the issuance of 9% , 2 month notes payable against liability for purchase of
merchandise
(3)
Mar 31,
Interest Expense ( 28800 x 0.09 x 2/12)
432
Interest Payable
432
To record the interest due on notes payable
(4)
Apr,1
Notes Payable
28,800
Interest Payable
432
Cash
29,232
(5)
July,1
Equipment
63,090
Cash
12,690
Notes Payable
50,400
To record the purchase of equipment against cash and issuance of 10 %, 3 months notes of
$50,400
(6)
Sep,30
Interest Expense
1,260
Interest Payable
1,260
To record the interest due on notes payable
(7)
Oct,1
Notes Payable
50,400
Interest Payable
1,260
Cash
51,66
To record the payment of Face value of notes payable and interest thereon.
(8)
Dec,1
Cash
28,800
Notes Payable
28,800
To record the borrowing from Paola Bank against issuance of 8%, 3 months notes payable
(9)
Dec 31,
Interest Expense
192
Interest Payable
192
To record the accrued interest at the quarter end.
(‘B)
Posting of Accounts Notes Payable, Interest Expense and Interest Payable
Notes Payable
(4) 28,800
(7) 50,400
28,800 (2)
50,400 (5)
28,800 (8)
28,800
Interest Expense
(3) 432
(6) 1260
(9) 192
Interest Payable
(4) 432
(7) 1260
432 (3)
1260 (6)
192 (9)
192
(‘C ) Balance Sheet Extracts
Assets
Amount ($)
Liabilities
Amount ($)
Current Liabilities
Notes Payable 28,800
Interest Payable 192
28,992
(‘D) Interest Expense for The year
Interest Expense = $ 1,884
(‘A)- Journal Entries
Sr No
Date
Account Details and Explanation
Debit
Credit
(1)
Jan,2
Merchandise Inventory
28,800
Accounts Payable
28,800
To record the merchandise purchase
(2)
Feb,1
Accounts Payable
28,800
Notes Payable
28,800
To record the issuance of 9% , 2 month notes payable ag.

Problem 1.27 ,a,b,f from Chapter 1 in the text book Signals and S.pdf

Problem 1.27 ,a,b,f from Chapter 1 in the text book \" Signals and Systems-second edition\" by
Alan V. Oppenheim
ISBN # 0-13-814757-4
Solution
(a) Stable and Linear
(b) Stable, linear, causal, memoryless
(f) Stable , linear.

Problem 11 in Chapter 15 examined the TV-viewing habits of adopted .pdf

This document discusses a study that examined the TV-viewing habits of adopted children and how they relate to their biological parents and adoptive parents. A multiple regression analysis was conducted using the TV habits of both the biological parents and adoptive parents to predict the habits of the adopted children. The question asks what percentage of the variance in the children's TV habits would be explained by this multiple regression model using both sets of parents.

Problem httpi.imgur.comLFdvjnJ.jpg1SolutionAssumtions of.pdf

Problem 3-9
After plotting demand for four periods, an emergency room manager has concluded that a trend-
adjusted exponential smoothing model is appropriate to predict future demand. The initial
estimate of trend is based on the net change of 30 for the three periods from 1 to 4, for an
average of +10 units.
Use ?=.5 and ?=.1, and TAF of 250 for period 5. Obtain forecasts for periods 6 through 10.
(Round your intermediate calculations and final answers to 2 decimal places.)
After plotting demand for four periods, an emergency room manager has concluded that a trend-
adjusted exponential smoothing model is appropriate to predict future demand. The initial
estimate of trend is based on the net change of 30 for the three periods from 1 to 4, for an
average of +10 units.
Solution
6 263.30 7 272.89 8 281.53 9 290.78 10 298.72.

Problem 8-9A certain investment requires an initial outlay of $12 .pdf

problem 24.4b please help PROBLEM 24.4B Hans Enterprises is a large producer of birdseed.
During June, the company produced 160 Computing and Journalizing Cost Variances 60 batche
of crow bait. Each batch weighs 1,000 pounds. To produce this quantity of output, the purchased
and used 170,000 pounds of direct materials at a cost of $816,000. It also incured á labor costs of
$20,000 for the 2.500 hours worked by employees on the crow bait crew turing overhead
incurred at the crow bait plant during June totaled $4.200, of which also incurred direct Man
$3,100 was )-pound batch of crow bait is as considered fixed. Hans\'s standard cost information
for each 1,000-pound batch of crow bait is follows: Direct materials standard price Standard
quantity allowed per batch Direct labor standard rate Standard hours allowed per batch . $5.00
per pound 1,025 pounds $8.25 per hour . .. . .. . ...15 direct labor hours $3,200 per month . . . .
.150 batches per month $10.00 per batch . . .. . Normal level of production .. . Variable overhead
application rate Fixed overhead application rate .. . ($3,300+150 batches) . Total overhead
application rate 22.00 per batch $32.00 per batch
Solution
Material Price variance StandardPrice of material Actual Cost Variance AQ 170000*5
Given 850000 816000 34000 Favorable Variance Quantity Variance Standared
Rate*SQ =5*1025*160 Actual Q *standard rate =170000*5 Variance 820000 850000 -30000
Unfavorable Variance Labor rate Variance Standared Labor Cost Actual Labor Cost
Variance 8.25*2500 Given 20625 20000 625 Favorable Variance Efficiency Variance
Standared Hour *standared rate Actual Hour * Standard rate Variance 19800 20625 -825
Unfavorable Variance Mnaufacturing Overhead spending Variance standard Variable
+fixed overhead Given 4800 4200 600 Favorable Variance Volume Variance 4800
5120 320 Favorable Variance DR CR Work in Progress 820000 Quantity Variance 30000
Material Price variance 34000 Direct Material 816000 Work in Progress 19800
Efficiency Variance 825 Labor rate Variance 625 Direct labor 20000 Work in
Progress 4800 Mnaufacturing Overhead spending Variance 600 Manufacturing Overhead
4200 Finished goods 844600 Work in Progress 844600 over applied overhead 600
Cost of goods sold 600.

Problem 6. Bag 1 has 2 red chips and 4 white chips. Bag 2 has 3 red .pdf

Problem 1Asset PAsset DAsset
QInvestment$5,000Probability$7,500Probability$8,150ProbabilityPessimistic4%0.107%0.0511
%0.31Most Likely6%0.9012%0.8019%0.40Optomistic8%0.1017%0.1528%0.29Calculate the
following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4) Which is
the best investmentProblem 2Asset WAsset TAsset
HInvestment$1,250Probability$10,000Probability$3,275ProbabilityPessimistic15%0.209%0.304
%0.10Most Likely16%0.5013%0.407%0.80Optomistic17%0.3020%0.3010%0.10Calculate the
following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4) Which is
the best investmentProblem 3Asset MAsset OAsset
BInvestment$12,749Probability$14,092Probability$17,762ProbabilityPessimistic2%0.407%0.70
11%0.25Most Likely8%0.2012%0.1519%0.50Optomistic14%0.4017%0.1528%0.25Calculate
the following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4) Which
is the best investmentProblem 1Asset PAsset DAsset
QInvestment$5,000Probability$7,500Probability$8,150ProbabilityPessimistic4%0.107%0.0511
%0.31Most Likely6%0.9012%0.8019%0.40Optomistic8%0.1017%0.1528%0.29Calculate the
following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4) Which is
the best investmentProblem 2Asset WAsset TAsset
HInvestment$1,250Probability$10,000Probability$3,275ProbabilityPessimistic15%0.209%0.304
%0.10Most Likely16%0.5013%0.407%0.80Optomistic17%0.3020%0.3010%0.10Calculate the
following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4) Which is
the best investmentProblem 3Asset MAsset OAsset
BInvestment$12,749Probability$14,092Probability$17,762ProbabilityPessimistic2%0.407%0.70
11%0.25Most Likely8%0.2012%0.1519%0.50Optomistic14%0.4017%0.1528%0.25Calculate
the following: 1) Range of outcomes2) Weighted average return3) Standard Deviation4)
Which is the best investment
Solution
Problem1:
1. Range of out come:
2. Weighted average return:
3. Standard Deviation:
4. Which is the best investment
Machine P was having low risk hence it will be the best investment
Problem 2:
1. Range of out come:
2. Weighted average return:
3. Standard Deviation:
4. Which is the best investment
Machine W was having low risk hence it will be the best investment
Problem 3:
1. Range of out come:
2. Weighted average return:
3. Standard Deviation:
4. Which is the best investment
Machine O was having low risk hence it will be the best investmentRange of out comesMachine
PPessimestic0.4%Most likely5.4%Optimistic0.8%Range of out comesMachine
DPessimestic0.4%Most likely9.6%Optimistic1.1%Range of out comes:Machine
QPessimestic3.4%Most likely7.6%Optimistic8.1%.

Problem 5At a constant interest rate of 15, compounded annually, .pdf

Problem 16 in Chapter 11 described a study examining the effect of eating oatmeal regularly the
effect of eating oatmeal regularly on cholesterol. Cholesterol was measured before and after
adding oatmeal to the diet of a sample of n = 9 participants. for this sample, cholesterol scores
averaged MD = 16 points lower with the oatmeal diet with SS = 538 for the difference scores.
Use the data to estimate how much effort oatmeal would have on the cholesterol level for this
general population. Make a point estimate and a 95% confidence interval estimate of the
population mean difference.
Solution
Given mean=16, s^2=SS/(n-1)=538/8= 67.25
a point estimate= 16
a=0.05, |t(0.025,df=n-1=8)|=2.31 (check student t table)
So 95% CI is
xbar±t*[s^2/n]
--> 16±2.31*sqrt(67.25/9)
--> (9.685531, 22.31447).

Problem 12-9AODGERS INC.Comparative Balance Sheets December 31.pdf

Problem 12-9A
ODGERS INC.
Comparative Balance Sheets
December 31
Assets
2014
2013
$ 155,944
$ 93,412
169,454
73,340
217,125
198,501
54,812
50,180
266,340
210,370
550,050
468,025
(96,500
)
(100,360
)
$1,317,225
$993,468
Liabilities and Stockholders’ Equity
$ 196,860
$ 129,889
31,845
40,530
212,300
281,780
424,600
337,750
451,620
203,519
$1,317,225
$993,468
ODGERS INC.
Income Statement Data
For the Year Ended December 31, 2014
$749,728
$261,438
23,951
89,745
52,650
9,129
14,475
451,388
$ 298,340
ODGERS INC.
Statement of Cash Flows
For the Year Ended December 31, 2014
Adjustments to reconcile net income to
Problem 12-9A Condensed financial data of Odgers Inc. follow.
ODGERS INC.
Comparative Balance Sheets
December 31
Assets
2014
2013Cash
$ 155,944
$ 93,412Accounts receivable
169,454
73,340Inventory
217,125
198,501Prepaid expenses
54,812
50,180Long-term investments
266,340
210,370Plant assets
550,050
468,025Accumulated depreciation
(96,500
)
(100,360
)Total
$1,317,225
$993,468
Liabilities and Stockholders’ EquityAccounts payable
$ 196,860
$ 129,889Accrued expenses payable
31,845
40,530Bonds payable
212,300
281,780Common stock
424,600
337,750Retained earnings
451,620
203,519Total
$1,317,225
$993,468
ODGERS INC.
Income Statement Data
For the Year Ended December 31, 2014Sales revenue
$749,728Less: Cost of goods sold
$261,438 Operating expenses, excluding depreciation
23,951 Depreciation expense
89,745 Income tax expense
52,650 Interest expense
9,129 Loss on disposal of plant assets
14,475
451,388Net income
$ 298,340
Additional information:
1.New plant assets costing $193,000 were purchased for cash during the year.2.Old plant assets
having an original cost of $110,975 and accumulated depreciation of $93,605 were sold for
$2,895 cash.3.Bonds payable matured and were paid off at face value for cash.4.A cash dividend
of $50,239 was declared and paid during the year.
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash
flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
ODGERS INC.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash
Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by
Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating
ActivitiesNet Cash used by Financing ActivitiesNet Cash used by Investing ActivitiesNet Cash
used by Operating ActivitiesNet Decrease in CashNet Increase in Cash
Increase in Accounts Payable Loss on Disposal of Plant Assets Net Income Decrease
in Accounts Receivable Increase in Prepaid Expenses Decrease in Prepaid
Expenses Decrease in Accrued Expenses Payable Decrease in Inventory Increase in
Inventory Sale of Common Stock Payment of Cash Dividends Increase in Accounts
Receivable Redemption of Bonds Purchase of Plant Assets Depreciation
Expense Decrease in Accounts Payable Increase in Accrue.

Problem 11-2A Fechter Corporation had the following stockholders’ eq.pdf

Problem 11-2A Fechter Corporation had the following stockholders’ equity accounts on January
1, 2017: Common Stock ($5 par) $536,800, Paid-in Capital in Excess of Par—Common Stock
$193,790, and Retained Earnings $100,450. In 2017, the company had the following treasury
stock transactions. Mar. 1 Purchased 5,700 shares at $9 per share. June 1 Sold 1,040 shares at
$13 per share. Sept. 1 Sold 1,980 shares at $10 per share. Dec. 1 Sold 1,310 shares at $7 per
share. Fechter Corporation uses the cost method of accounting for treasury stock. In 2017, the
company reported net income of $32,820
ournalize the treasury stock transactions, and prepare the closing entry at December 31, 2017, for
net income. (Record journal entries in the order presented in the problem. Credit account titles
are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select \"No Entry\" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
Paid-in Capital from Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
J10
J10
J10
Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
J10
J10
J10
J10
Retained Earnings
Date
Explanation
Ref.
Debit
Credit
Balance
Balance
?
J10
SHOW LIST OF ACCOUNTS
Date
Account Titles and Explanation
Debit
Credit Jan. 1Mar. 1June 1Sept. 1Dec. 1Dec. 31
Jan. 1Mar. 1June 1Sept. 1Dec. 1Dec. 31
Jan. 1Mar. 1June 1Sept. 1Dec. 1Dec. 31
Dec. 1
Jan. 1Mar. 1June 1Sept. 1Dec. 1Dec. 31
SHOW LIST OF ACCOUNTS
Solution
Journal Entries:
Date
Account Titles and Explanation
Debit
Credit
Mar. 1
Treasury Stock (5700*$9)
$ 51,300.00
Cash
$ 51,300.00
(Being shares repurchased )
June. 1
Cash (1040*$13)
$ 13,520.00
Paid-in Capital from Treasury Stock = 13520 - 9360
$ 4,160.00
Treasury Stock (1040*$9)
$ 9,360.00
(Being treasury shares reissued)
Sept. 1
Cash (1980*$10)
$ 19,800.00
Paid-in Capital from Treasury Stock = 19800-17820
$ 1,980.00
Treasury Stock (1980*$9)
$ 17,820.00
(Being treasury shares reissued)
Dec. 1
Cash (1310*$7)
$ 9,170.00
Paid-in Capital from Treasury Stock = 11790-9170
$ 2,620.00
Treasury Stock (1310*$9)
$ 11,790.00
(Being treasury shares reissued)
Dec. 31
Income Summary
$ 32,820.00
Retained Earnings
$ 32,820.00
(Being bet inc0me closed)
Paid-in Capital from Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
June. 1
J10
$ 4,160.00
$ 4,160.00
Sept. 1
J10
$ 1,980.00
$ 6,140.00
Dec. 1
J10
$ 2,620.00
$ 3,520.00
Treasury Stock
Date
Explanation
Ref.
Debit
Credit
Balance
Mar. 1
J10
$ 51,300.00
$ 51,300.00
June. 1
J10
$ 9,360.00
$ 41,940.00
Sept. 1
J10
$ 17,820.00
$ 24,120.00
Dec. 1
J10
$ 11,790.00
$ 12,330.00
Retained Earnings
Date
Explanation
Ref.
Debit
Credit
Balance
Balance
$ 100,450.00
$ 100,450.00
Dec. 31
J10
$ 32,820.00
$ 133,270.00
FECHTER CORPORATION
Balance Sheet (Partial)
For the Year Ended December 31, 2017
Common Stock ($5 par)
$ 536,800.00
Paid-in Capital in Excess of Par—Common Stock
$ 193,790.00
Retained Earnings
$ 133,270.0.

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