aact1511 2010s2w09 HomeQ

aact1511 2010s2w09 HomeQ - SolutiontoProblem13.7...

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Suggested solutions to homework questions – Week 9 Solution to Problem 13.7 1. Given that it has $400 000 cash inflow from investing activities it appears that it is selling off PPE or some part of the business. 2. Most likely repayment of borrowings but could also include dividends and share buy backs. 3. It appears to be declining. While it had a positive cash flow from operations, it used these funds plus those from the sale of investments to reduce financing. Solution to Problem 13.29
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Solution to Problem 13.29 (cont) Darby Ltd. Reconciliation of Net Profit and Cash from Operations For Year Ended 30 June 2009 Net profit 114,000 Add: Depreciation expense - buildings 37,000 Depreciation expense - equipment 65,000 Loss on disposal of land 18,000 Less: Gain on sale of buildings -31,000 89,000 Adjustment for changes in operating assets & liabilities: Increase in accounts receivable -17,000 Increase in provision for doubtful debts 4,000 Decrease in inventory 15,000 Increase in prepaid insurance
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aact1511 2010s2w09 HomeQ - SolutiontoProblem13.7...

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