C214 - CALCULATION QUESTIONS WITH
COMPLETE SOLUTIONS 2025
SalesQrevenueQisQ500,QoperatingQexpensesQisQ250,QdepreciationQisQ200,QandQtheQtaxQrateQisQ25%.QWhatQisQ
theQnetQincome?Q-QCORRECTQANSWERQ-NetQIncome=QSalesQRevenueQ-QoperatingQexpensesQ-
QdepreciationQ=QXQ(1Q-QtaxQrate)Q=QNetQIncome
500-250-200=Q50Q(1-.25)Q=Q37.5
IfQnetQincomeQisQ100QandQtheQpayoutQratioQisQ35%,QwhatQisQtheQadditionQtoQretainedQearnings?Q-
QCORRECTQANSWERQ-NetQIncomeQ=QDividendsQ+QAdditionQtoQRetainedQEarnings
RetainedQEarningsQ=QNetQIncomeQ-QDividendsQ(%QxQNetQIncome)
DividendsQ=Q.35QxQ100Q=Q35
=100Q-Q35Q=Q65
AQfirmQhasQsalesQofQ400,QaQnetQmarginQofQ20%,QandQaQpayoutQratioQofQ25%.QHowQmuchQisQaddedQtoQretain
edQearnings?Q-QCORRECTQANSWERQ-NetQIncomeQ=QDividendsQ+QAdditionQtoQRetainedQEarnings
RetainedQEarningsQ=QNetQIncomeQ-QDividendsQ(%QxQNetQIncome)
NetQIncomeQ=Q.20QxQ400Q=Q80
DividendsQ=Q.25QxQ80Q=Q20
=80Q-Q20Q=60
IfQcurrentQassetsQincreaseQbyQ200QandQlong-
termQdebtQincreasesQbyQ300,QwhatQisQtheQimpactQonQcashQflow?Q-QCORRECTQANSWERQ-=QassetsQ-
QliabilitiesQ
=Q200Q-Q300Q=Q100
WhatQisQCFOQ(CashQFlowQOperations),Qgiven:
, NetQIncomeQ100,000
DepreciationQ20,000
ChangeQinQA/RQ10,000Q-QCORRECTQANSWERQ-CFOQ=QNetQIncomeQ+QDepreciationQ-QNWCQ(A/R)
Q
CFOQ=Q100,000Q+Q20,000Q-Q10,000Q=Q110,000
WhatQisQCFIQ(CashQFlowQInvesting),Qgiven:
GrossQEquipmentQ(jan)Q50,000
GrossQEquipmentQ(dec)Q65,000
NetQIncomeQ100,000
DepreciationQ20,000Q-QCORRECTQANSWERQ-CFIQ=Q(NetQPPE)x(-1)
=(50,000-65,000)x(-1)Q=Q-15,000
WhatQisQtheQCFI,Qgiven:
BeginningQNetQPPEQ250,000
EndingQNetQPPEQ300,000
DepreciationQExpenseQ40,000
EndingQGrossQPPEQ500,000Q-QCORRECTQANSWERQ-CFIQ=Q(NetQPPEQ+QDepreciation)x(-1)
=((250,000-300,000)Q+Q40,000))x(-1)Q=Q-90,000
WhatQisQCFFQ(CashQFlowQFinancing),Qgiven:
A/PQ100,000
AccruedQExpensesQ50,000
IncreaseQinQBondsQPayableQ300,000
DecreaseQinQEquityQ75,000
DividendsQPaidQ80,000Q-QCORRECTQANSWERQ-CFF=IncreaseQinQLong-termQDebtQ+QIncreaseQinQStocksQ-
QDividends
COMPLETE SOLUTIONS 2025
SalesQrevenueQisQ500,QoperatingQexpensesQisQ250,QdepreciationQisQ200,QandQtheQtaxQrateQisQ25%.QWhatQisQ
theQnetQincome?Q-QCORRECTQANSWERQ-NetQIncome=QSalesQRevenueQ-QoperatingQexpensesQ-
QdepreciationQ=QXQ(1Q-QtaxQrate)Q=QNetQIncome
500-250-200=Q50Q(1-.25)Q=Q37.5
IfQnetQincomeQisQ100QandQtheQpayoutQratioQisQ35%,QwhatQisQtheQadditionQtoQretainedQearnings?Q-
QCORRECTQANSWERQ-NetQIncomeQ=QDividendsQ+QAdditionQtoQRetainedQEarnings
RetainedQEarningsQ=QNetQIncomeQ-QDividendsQ(%QxQNetQIncome)
DividendsQ=Q.35QxQ100Q=Q35
=100Q-Q35Q=Q65
AQfirmQhasQsalesQofQ400,QaQnetQmarginQofQ20%,QandQaQpayoutQratioQofQ25%.QHowQmuchQisQaddedQtoQretain
edQearnings?Q-QCORRECTQANSWERQ-NetQIncomeQ=QDividendsQ+QAdditionQtoQRetainedQEarnings
RetainedQEarningsQ=QNetQIncomeQ-QDividendsQ(%QxQNetQIncome)
NetQIncomeQ=Q.20QxQ400Q=Q80
DividendsQ=Q.25QxQ80Q=Q20
=80Q-Q20Q=60
IfQcurrentQassetsQincreaseQbyQ200QandQlong-
termQdebtQincreasesQbyQ300,QwhatQisQtheQimpactQonQcashQflow?Q-QCORRECTQANSWERQ-=QassetsQ-
QliabilitiesQ
=Q200Q-Q300Q=Q100
WhatQisQCFOQ(CashQFlowQOperations),Qgiven:
, NetQIncomeQ100,000
DepreciationQ20,000
ChangeQinQA/RQ10,000Q-QCORRECTQANSWERQ-CFOQ=QNetQIncomeQ+QDepreciationQ-QNWCQ(A/R)
Q
CFOQ=Q100,000Q+Q20,000Q-Q10,000Q=Q110,000
WhatQisQCFIQ(CashQFlowQInvesting),Qgiven:
GrossQEquipmentQ(jan)Q50,000
GrossQEquipmentQ(dec)Q65,000
NetQIncomeQ100,000
DepreciationQ20,000Q-QCORRECTQANSWERQ-CFIQ=Q(NetQPPE)x(-1)
=(50,000-65,000)x(-1)Q=Q-15,000
WhatQisQtheQCFI,Qgiven:
BeginningQNetQPPEQ250,000
EndingQNetQPPEQ300,000
DepreciationQExpenseQ40,000
EndingQGrossQPPEQ500,000Q-QCORRECTQANSWERQ-CFIQ=Q(NetQPPEQ+QDepreciation)x(-1)
=((250,000-300,000)Q+Q40,000))x(-1)Q=Q-90,000
WhatQisQCFFQ(CashQFlowQFinancing),Qgiven:
A/PQ100,000
AccruedQExpensesQ50,000
IncreaseQinQBondsQPayableQ300,000
DecreaseQinQEquityQ75,000
DividendsQPaidQ80,000Q-QCORRECTQANSWERQ-CFF=IncreaseQinQLong-termQDebtQ+QIncreaseQinQStocksQ-
QDividends