the following comparative information is available for prasad company for 2012 533821
The following comparative information is available for Prasad Company for 2012.
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the following comparative information is available for prasad company for 2012 533821
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FIFO |
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Sales revenue |
$86,000 |
$86,000 |
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Cost of goods sold |
38,000 |
29,000 |
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Operating expenses |
||
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(including depreciation) |
27,000 |
27,000 |
|
Depreciation |
10,000 |
10,000 |
|
Cash paid for inventory purchases |
32,000 |
32,000 |
Instructions
(a) Determine net income under each approach. Assume a 30% tax rate.
(b) Determine net cash provided by operating activities under each approach. Assume that all sales were on a cash basis and that income taxes and operating expenses, other than depreciation, were on a cash basis.
(c) Calculate the quality of earnings ratio under each approach and explain your findings.
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