Lovato Motors Inc. has net cash flows from operating activities of $517,000. Cash flows used for investments in property, plant, and ed 70% of this investment was used to replace existing capacity. Determine the free cash flow for Lovato Motors Inc.

Lovato Motors Inc. has net cash flows from operating activities of $517,000. Cash flows used for investments in property, plant, and ed 70% of this investment was used to replace existing capacity. Determine the free cash flow for Lovato Motors Inc.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter15: Statement Of Cash Flows

Section: Chapter Questions

Problem 7BE

See similar textbooks

Related questions

Q: On January 2nd, 2014 a business bought two motor vehicles for $30000 and $40000. It was decided that…

A: Non current assets arar those assets which arare being held by the business for more than one year.…

Q: BRONCO METALS Statement of Cash Flows For the Year Ended December 31, 2021 Cash flows from operating…

A: The cash flow statement is prepared to know the net change in cash of business during year. There…

Q: Using the FIFO method, calculate the cost of ending inventory and cost of goods sold for Clark…

A: The FIFO (First-In, First-Out) method is an inventory valuation method used to determine the cost…

Q: The account balances for a company are listed below. All balances are as of December 31, 202 except…

A: The profit created by a company's own operations is referred to as income from operations. Money…

Q: Octavio starts the year with outside basis of $23,000 and an amount at-risk of $23,000 in his…

A: In order to carry out a business or investment activity with the goal of turning a profit, two or…

Q: Coe Parts applies fixed overhead at the rate of $7.08 per unit. Budgeted fixed overhead was…

A: FIXED OVERHEAD PRICE VARIANCEFixed overhead variance which arises due to the…

Q: On June 1, 2023, JetCom Inventors Inc. Issued December 1, 2023. Required: a Calculate the issue…

A: The Effective Interest Method is a common approach used to amortize the discount or premium on a…

Q: You run a school in Florida. Fixed monthly cost is $5,014.00 for rent and utilities, $5,602.00 is…

A: Charges refer to the fixed expense that is required to be paid by the student to the schools at…

Q: Andy worked 60 hours last week for Bread Works Manufacturing. Of the 60 hours 10 hours were…

A: It's important for employees and employers to be aware of their rights and obligations regarding…

Q: Identify how each of the following separate transactions through 10 affects financial statements.…

A: The computation balance sheet is prepared to show the assets, liabilities, and shareholders' funds.…

Q: Sunland Company has recently decided to go public and has hired you as an independent CPA. One…

A: The cash flow statement is an essential part of the company's financial statements. A cash flow…

Q: Finance Co lent $9.8 million to Corbin Construction on January 1, 2021, to construct a playground.…

A: In order to keep track of commercial transactions, the business entities document the transactions…

Q: Which of the following accounts are most likely to be used in a journal entry to record the budget?…

A: Budget is the estimation of revenue and expense prior to start the operation. To manage the working…

Q: Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent.…

A: Residual Income is used to assess the economic value added by an investment or business unit. If the…

Q: Which one of the following is the variance that deals with under or over achievement of budgeted…

A: Budgeted direct labor hours refer to the estimated or planned amount of time that is allocated for…

Q: 2. Sales Cost of goods sold Gross proft Operating expenses Income from operations Interest expense…

A: CASH FLOW FROM OPERATING ACTIVITIES Operating activities are the principal revenue- producing…

Q: ndicate whether each of the following variances is favorable (F) or unfavorable (U). The first one…

A: A variance is said to be Favorable when the budgeted revenues are less than actual revenues and…

Q: Prepare a Cash T-account for the above transactions, and compute the ending Cash balance. Code each…

A: The T-account is prepared to estimate the ending balance in the specific account. The…

Q: The Prince-Robbins partnership has the following capital account balances on January 1, 2021:…

A: Partnership accounting refers to the process of recording and reporting financial transactions and…

Q: b. Prepare an income statement for the year. (Do not leave any empty spaces; input a 0 wherev…

A: ABSORPTION COSTINGAbsorption Costing is a Cost managerial Accounting method in which All Cost…

Q: On January 22, Erin Corporation issued for cash 33,000 shares of no-par common stock at $45. On…

A: Journal entry: It is the set of economic events that can be measured in monetary terms. These are…

Q: The management of Unter Corporation, an architectural design firm, is considering an investment with…

A: Payback period :— It is the time period in years which is required to recover all the cash outflows…

Q: Calculate equivalent units of transferred-in costs, direct materials, and conversion costs.

A: Assumption - Since no information is given regarding which method has to be followed , we are…

Q: Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the…

A: Computation of the Credit sales for November :Credit sales for November =Total sales - cash…

Q: Triangle Fastener Corporation accumulates costs for its single product using process costing. Direct…

A: When the goods are produced all costs related to the job is debited to the work in process account.…

Q: The unadjusted trial balance at year-end for a company that uses the percent of receivables method…

A: The percentage of receivables method is one of the methods of determining the balance of allowance…

Q: Required: Calculate the cost of serving the local commercial market. 2. Calculate the margin earned…

A: The total cost of the product is the cost of producing or manufacturing the product, hence it…

Q: On January 1, 2023, Monty Corp. had 206,000 common shares outstanding. On April 1, 2023, 20,600…

A: Earnings per Share can be referred to as a measure used to indicate the profit allocated to the…

Q: Cerise Company would record a note payable of________, if the terms of the loan with a bank are as…

A: PRESENT VALUEPresent Value is the Current Value of Future Cash Flows at a Discounting Rate.Present…

Q: On June 8, Williams Compa earest dollar. a. $83,560 b. $75,964 Oc. $7,596 d$78.496

A: In this question, we will find out the maturity value by calculating the interest on notes payable…

Q: An SME provided the following on December 31, 2022: Cash Accounts receivable Prepayments Inventories…

A: Current Assets: Current assets are resources or assets that are expected to be converted into cash…

Q: IC Co is a shop that sells ice-creams and cakes. The following information relates to the year 20X6:…

A: Activity-Based Costing (ABC) is a costing method used by businesses to allocate indirect costs to…

Q: Prepare entries to record the following: a. Issued 1,000 shares of $10 par common stock at $56. If…

A: JOURNAL ENTRIESJournal Entry is the First stage of Accounting Process. Journal Entry is the Process…

Q: Troy Engines, Limited, manufactures a variety of engines for use in heavy equipment. The company has…

A: Make or buy is the criterion that helps in the decision making. It helps to decide that whether an…

Q: On April 10, a company acquired land in exchange for 2,500 shares of $23 par common stock with a…

A: JOURNAL ENTRIESJournal Entry is the First stage of Accounting Process. Journal Entry is the Process…

Q: Russel Company is a consulting firm. The firm expects to have $34,400 in indirect costs during the…

A: Labor cost is the amount of cost incurred on the wage payment to the laborers. It could be direct or…

Q: or the year ended December 31, 2022, Settles Incorporated earned an ROI of 10.5%. Sales for the year…

A: ROI = Net income / Average total AssetsDivision of Net income with Average total Assets derives the…

Q: When shares are issued fully payable on application, the journal entries to record the issue and…

A: Share Application:When a company decides to issue shares, it invites interested parties to apply for…

Q: In the consolidation eliminating entries for 2021, beginning retained earnings is debited for

A: The eliminating entries are simply the ones which are required to be made so that the double effect…

Q: The following data was taken from recent annual reports of Wonka Bar Co.: Cost of goods sold $…

A: INVENTORY TURNOVER RATIOInventory Turnover Ratio is the Ratio between Cost of Goods Sold &…

Q: Metal Manufacturing has isolated four alternatives for meeting its need for increased production…

A: Coefficient of variation is a statistical measure of dispersion and is calculated as the ratio of…

Q: Lois Bragg owns a small restaurant in Boston. Ms. Bragg provided her accountant with the following…

A: Loans involve an agreement between the lender and the borrower, outlining the terms and conditions…

Q: The Accounting Cycle Question: What does it mean to adjust accounts for timing mismatches? What is…

A: Adjusting accounts for timing mismatches refers to the process of aligning the recognition of…

Q: Brown Company is considering the purchase of Orange Company. Orange Company has supplied the…

A: When a company purchases another company it is called acquisition. At the time of acquisition, we…

Q: The following information relates to production activities of Mercer Manufacturing for the year.…

A: Direct material variance :— It is the difference between actual direct material cost and standard…

Q: Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions.…

A: It's worth noting that the specific components of an asset's cost can vary depending on the nature…

Q: Premiums. Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD.…

A: Coupon accounting is the process of accounting for discounts or coupons offered by a company to…

Q: Prepare a production report for the Refinning Department for March

A: 1. Since here no information has been provided about which method has to be followed for calculation…

Q: Barnes Company reports the following for its product for its first year of operations. Direct…

A: Contribution Margin -Contribution Margin is a profit after deducting variable costs from the sales…

Question

Please do not give image format and dont use chatgpt

Free Cash Flow
Lovato Motors Inc. has net cash flows from operating activities of $517,000. Cash flows used for investments in property, plant, and equipment totaled $320,000, of which,
70% of this investment was used to replace existing capacity.
Determine the free cash flow for Lovato Motors Inc.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Defination

VIEW

Step 2: Computation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Lovato Motors Inc. has cash flows from operating activities of $720,000. Cash flows used for investments in property, plant, and equipment totaled $440,000, of which 85% of this investment was used to replace existing capacity.Determine the free cash flow for Lovato Motors Inc.
Sweeter Enterprises Inc. has cash flows from operating activities of $365,000. Cash flows used for investments in property, plant, and equipment totaled $77,000, of which 75% of this investment was used to replace existing capacity. a. Determine the free cash flow for Sweeter Enterprises Inc.
Sweeter Enterprises Inc. has net cash flows from operating activities of $378,000. Cash flows used for investments in property, plant, and equipment totaled $76,000, of which 65% of this investment was used to replace existing capacity. a. Determine the free cash flow for Sweeter Enterprises Inc. b. How might a lender use free cash flow to determine whether or not to give Sweeter Enterprises Inc. a loan? Free cash flow is often used to measure the financial strength of a business. The - free cash flow that a business has, the easier it will be for the company to pay the interest on the loan and repay the loan principal. Sweeter's free cash flow is $ which is very
Company Express S. A. asks you to construct cash flows for following three (3) investment projects, containing following information:PROJECT 1a. Sales (in ThCh$):- Year 1: 90,000- Year 2: 55,000- Year 3: 75,000- Year 4: 190,000b. Cost of sales is estimated at 53% of sales.c. Depreciation for year is ThCh$ 15,000 per period (period 1 to 3). In year 4 there is a sale of machinery that results in a gain on sale of non-current assets of ThCh$ 9,800. Total depreciation for year 4 is ThCh$ 12,500.d. Administrative expenses are equivalent to 17% of sales.e. In period 0 there is an investment of ThCh$ 58,000.f. There is credit financing of ThCh$ 32,000 which is amortized in equal parts of ThCh$ 8,000 per period with a financial expense of ThCh$ 3,700 per period.g. There is an investment in working capital of ThCh$ 24,000 in period 0, which is recovered in period 4.h. In period 4 there is an investment in land of ThCh$ 40,000.i. Income tax rate is 17%. Calculate: cash flow per period. Please…
Sweeter Enterprises Inc. has cash flows from operating activities of $539,000. Cash flows used for investments in property, plant, and equipment totaled $210,000, of which 75% of this investment was used to replace existing capacity.a. Determine the free cash flow for Sweeter Enterprises Inc.b. How might a lender use free cash flow to determine whether or not to giveSweeter Enterprises Inc. a loan?
The following table presents some of the current year's financial data for the Happy Giraffe ConstructionCompany. Complete the table by computing Happy Giraffe's free cash flows and fundamental value (rounded to the nearest whole dollar) based solely on this year's information: Variable Value Sales revenue$400, 000 Operating costs and taxes $45, 000 Required investments in operating capital S20, 000Weighted average cost of capital 15% Annual free cash flow $ Fundamental value $ Assuming all otherthings being equal, if Happy Giraffe's costs of equity decreases, the firm's will .
8. State the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows:12. Sweeter Enterprises Inc. has cash flows from operating activities of $300,000. Cash flows used for investments in property, plant, and equipment totaled $63,000, of which 60% of this investment was used to replace existing capacity.
Requirements Calculate the following items for the statement of cash flows: a. Beginning and ending Plant Assets, Net, were $106,000 and $101,000, respectively. Depreciation for the period was $18,000, and purchases of new plant assets were $26,000. Plant assets were sold at a gain of $5,000. What were the cash proceeds of the sale? b. Beginning and ending Retained Earnings were $44,000 and $70,000, respectively. Net income for the period was $46,000, and stock dividends were $6,000. How much were the cash dividends? Requirement a. Beginning and ending Plant Assets, Net, were $106,000 and $101,000, respectively. Depreciation for the period was $18,000, and purchases of new plant assets were $26,000. Plant assets were sold at a gain of $5,000. What were the cash proceeds of the sale? Cash proceeds from the sale were
Simbad Industries has cash flows from operating activities of $720,000. Cash flows used for investments in property, plant and equipment totaled $440,000 of which 85% of it was used to replace existing capacity. Determine the free cash flow of Simbad Industries How might a lender use free cash flow to determine whether or not to give Simbad Industries a loan?
Connor Designs Company has net cash flows from operating activities of $425,000 and net cash flows used for investing activities of $65,000, of which 70% was used to purchase property, plant, and equipment. What is the free cash flow for Connor Designs? Free cash flow s
The financial statements showed the following: Operating income $2,750,000, Depreciation $1,350,000, Expenditures on fixed assets and net operating working capital $860,000. Tax rate is 35%. Compute for the free cash flow.
Connor Designs Company has cash flows for operating activities of $425,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain its current operations. What is the free cash flow for Connor Designs? i got confused when they put a percentage in there