The following entries appear on the annual income statement for Peckerwood HoldingsSales $2,775,000Cost of goods sold -$1,210,000Wages -$650,000Depreciation -75,000Interest expenses -$55,000What is Peckerwood's operating cash flow, if its tax rate is 30%?Group of answer choices$663,000$624,000$553,000$549,500None of the other answers is correct
Question
The following entries appear on the annual income statement for Peckerwood HoldingsSales 1,210,000Wages -55,000What is Peckerwood's operating cash flow, if its tax rate is 30%?Group of answer choices624,000549,500None of the other answers is correct
Solution
To calculate the operating cash flow, we first need to calculate the operating income (also known as EBIT - Earnings Before Interest and Taxes) and then subtract the taxes.
Step 1: Calculate Operating Income (EBIT) Operating Income = Sales - Cost of Goods Sold - Wages - Depreciation Operating Income = 1,210,000 - 75,000 = $840,000
Step 2: Calculate Taxes Taxes = Operating Income * Tax Rate Taxes = 252,000
Step 3: Calculate Operating Cash Flow Operating Cash Flow = Operating Income - Taxes Operating Cash Flow = 252,000 = $588,000
So, the operating cash flow for Peckerwood Holdings is $588,000. Therefore, none of the other answers is correct.
Similar Questions
The following entries appear on the annual income statement for Timber Products Ltd:Sales $987,500Materials -$45,700Selling expenses -$65,800Administrative expenses -$38,600Wages -$236,900Depreciation -$23,700Interest expenses -$24,580What is Timber Products Ltd operating cash flow if its tax rate is 30%?Group of answer choices$362,854$427,460$718,766$576,800
The following entries appear on the annual income statement for Blue Ribbon Catering Ltd.Sales $890,000Cost of goods sold -$355,300Wages -$350,000Depreciation -15,000Interest expenses -$10,000What is Blue Ribbon's profit after tax, if its tax rate is 30%?Group of answer choices$111,790$133,790$118,790$126,790None of the other answers is correct
Le Place has sales of $439,000, depreciation of $32,000, and net working capital of $56,000. The firm has a tax rate of 34 percent and a net profit margin of 6 percent. The firm has no interest expense. What is the amount of the operating cash flow?Group of answer choices$54,980$114,340$52,616$58,340$49,384
Using the information below, calculate net cash flows from operating activities: Net income $120,000Receive cash from issuing stock 80,000Pay cash for equipment 90,000Increase in accounts receivable 10,000Depreciation expense 30,000Increase in accounts payable 5,000Receive cash from sale of land 75,000Pay cash dividends 20,000Multiple Choice$155,000.$190,000.$145,000.$115,000.
What is the IRR of the following set of cash flows? Year Cash Flow0 –$9,503 1 4,300 2 5,500 3 3,900
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.