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  3. for each transaction below, write the net effect o

For each transaction below, write the net effect on Current Assets (CA), Total Assets, Net Income Before...

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Accounting

For each transactionbelow, write the net effect on Current Assets (CA), Total Assets,Net Income Before Taxes (NI pretax), Cash flows from operatingactivities (CFO), and Cash flows from investing activities(CFI).

  • Write only the effect for the current period.
  • Assume the company is a merchandising firm.
  • If the net effect is negative, include a negative sign. If noeffect, write 0.
  • For CFO and CFI, positive net inflows are positive, net cashoutflows are negative.
  • For classifying interest expense, assume U.S. GAAPconventions.

Transaction

CA

Total Assets

NI (pretax)

CFO

CFI

Pay $25 to improve apiece of machinery

Answer

Answer

Answer

Answer

Answer

Impair a plot of landfrom $75 down to $20

Answer

Answer

Answer

Answer

Answer

Pay $82 for deliverytruck
($80 price + $2 delivery)

Answer

Answer

Answer

Answer

Answer

Recognize $25 ofwarranty expense (Company has Warranty Reserve liability)

Answer

Answer

Answer

Answer

Answer

Sell a store locationwith net book value of $92 for $110 in cash

Answer & Explanation Solved by verified expert
3.6 Ratings (587 Votes)

Transaction CA Total assets NI (pretax) CFO CFI
Pay $25 to improve machine $                -   $          -   $             (25) $        (25) $          -  
Impair a plot of land from $75 to $20 $                -   $        (55) $             (55) $          -   $          -  
Pay $82 for delivery truck $             (82) $          -   $                -   $          -   $        (82)
Recognize $25 warranty $                -   $          -   $             (25) $          -   $          -  
Sell a store location $             110 $        (92) $               18 $          -   $       110

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