Question

Consider the following abbreviated financial statements for Parrothead Enterprises:

   

PARROTHEAD ENTERPRISES 2017 and 2018 Partial Balance Sheets
Assets								Liabilities and Owners’ Equity
		2017			2018					2017			2018
Current assets	$	1,302		$	1,435			Current liabilities	$	594		$	637
Net fixed assets		5,085			6,164			Long-term debt		2,804			2,987

  

PARROTHEAD ENTERPRISES 2018 Income Statement
Sales	$	16,066
Costs		7,279
Depreciation		1,459
Interest paid		452

  

a.	What is owners' equity for 2017 and 2018? (Do not round intermediate calculations.)
b.	What is the change in net working capital for 2018? (Do not round intermediate calculations.)
c-1.	In 2018, Parrothead Enterprises purchased $2,688 in new fixed assets. How much in fixed assets did Parrothead Enterprises sell? (Do not round intermediate calculations.)
c-2.	In 2018, Parrothead Enterprises purchased $2,688 in new fixed assets. What is the cash flow from assets for the year? The tax rate is 24 percent. (Do not round intermediate calculations.)
d-1.	During 2018, Parrothead Enterprises raised $584 in new long-term debt. How much long-term debt must Parrothead Enterprises have paid off during the year? (Do not round intermediate calculations.)
d-2.	During 2018, Parrothead Enterprises raised $584 in new long-term debt. Wh

Answer 1

As per rules I am answering the first 4 subparts of the question

A: Owners Equity = Total assets- liabilities

2017 = Equity = 1302+5085-594-2804=2989

2018 = Equity = 1435+6164-637-2987 = 3975

B: Change in NWC = Closing NWC- Opening NWC

= (1435-637)-(1302-594)

=$90

C-1: Opening fixed assets+Purchases-sales- depreciation = closing fixed assets

5085+ 2688- Sales-1459 = 6164

Asset Sales = $150

C-2 CF from assets = Operating CF – Capital expenditure- Additions to NWC

= (Sales – cost) – Fixed asset purchases – 90

= (16066-7279) – 2688-90

=6009