The annual income statement of Elgin Company shows the following items: $\begin{array} { l }
\text {Sales }&\$200,000 \
\text { Total expens es (excluding depreciation)}& \$140,000\
\text {Depreciation}&\$35,000 \
\text { Average income tax rate}& 20\%\
\end{array}$
Required:
Compute the following amounts (ignore present value considerations):
a. Net after- tax income
b. The annual amount of net after- tax cash flow solely from depreciation
c. Total net after- tax cash inflow from operations

Question

The annual income statement of Elgin Company shows the following items: $\begin{array} { l  }
 \text {Sales }&\$200,000 \
 \text { Total expens es (excluding depreciation)}& \$140,000\
 \text {Depreciation}&\$35,000 \
 \text { Average income tax rate}& 20\%\
\end{array}$
 Required:
Compute the following amounts (ignore present value considerations):
a. Net after- tax income
b. The annual amount of net after- tax cash flow solely from depreciation
c. Total net after- tax cash inflow from operations

Quizplus · Accepted Answer

The Answer of The annual income statement of Elgin Company shows the following items: $\begin{array} { l  }
 \text {Sales }&\$200,000 \
 \text { Total expens es (excluding depreciation)}& \$140,000\
 \text {Depreciation}&\$35,000 \
 \text { Average income tax rate}& 20\%\
\end{array}$
 Required:
Compute the following amounts (ignore present value considerations):
a. Net after- tax income
b. The annual amount of net after- tax cash flow solely from depreciation
c. Total net after- tax cash inflow from operations

The Annual Income Statement of Elgin Company Shows the Following