Chas McCormick started a corporation McCormick Co. on Jan. 1, 2023. Chas starts his business by...

  

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Chas McCormick started a corporation McCormick Co. on Jan. 1, 2023. Chas starts his business by investing $100,000 of his own money by purchasing 20,000 shares of $1 par value stock and borrowing $250,000 from the bank. The loan has an interest rate of 5%, and he will have to make quarterly payments of $25,000 of principle plus accumulated interest, on the first of each April, July, October, and January, until the entire principle is repaid. On April 1, Chas purchased equipment for $150,000 cash. He will depreciate the new equipment over five years using straight line depreciation and expects a salvage value of $20,000. He also purchased for cash for $60,000 in supplies during the year, with only $2,500 of supplies remaining at year end. Chas does not offer credit to his customers. For the first year of operations, he had cash revenues of $800,000. Chas also incurred $65,000 for other operating expenses, for which he still owes $12,500. Required: Ignoring taxes, determine (1) Cash from Operations, (ii) Cash from Investing, and (iii) Cash from Financing for the year. Be sure to show your work. Chas McCormick started a corporation McCormick Co. on Jan. 1, 2023. Chas starts his business by investing $100,000 of his own money by purchasing 20,000 shares of $1 par value stock and borrowing $250,000 from the bank. The loan has an interest rate of 5%, and he will have to make quarterly payments of $25,000 of principle plus accumulated interest, on the first of each April, July, October, and January, until the entire principle is repaid. On April 1, Chas purchased equipment for $150,000 cash. He will depreciate the new equipment over five years using straight line depreciation and expects a salvage value of $20,000. He also purchased for cash for $60,000 in supplies during the year, with only $2,500 of supplies remaining at year end. Chas does not offer credit to his customers. For the first year of operations, he had cash revenues of $800,000. Chas also incurred $65,000 for other operating expenses, for which he still owes $12,500. Required: Ignoring taxes, determine (1) Cash from Operations, (ii) Cash from Investing, and (iii) Cash from Financing for the year. Be sure to show your work.

Answer rating: 100% (QA)

Lets break down the cash flows for McCormick Co for the first year of operations i Cash from Operati... View the full answer