During 2010, Raines Umbrella Corp. had sales of $930,000. Cost of goods sold, ad

Question

During 2010, Raines Umbrella Corp. had sales of $930,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $180,000, respectively. In addition, the company had an interest expense of $55,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

During 2010, Raines Umbrella Corp. had sales of $930,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $680,000, $85,000, and $180,000, respectively. In addition, the company had an interest expense of $55,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

Explanation / Answer

Net income before tax is ( 930000 - 680000 - 85000 - 180000 - 55000 ) = -70,000

and no tax as the income is -ve

Cash flows is -70000 + 180000(depreciation) = 110,000

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