Problemultimate home appliance emporium is expanding its, Ask an Expert

Accounting

Problem:

Ultimate Home Appliance Emporium is expanding its product offerings in order to satisfy a wider range of customertastes and styles. The expansion project includes increasing the floor inventory by $610,000 and increasing its debt to suppliers by 70 percent of that amount. Ultimate plans to expand the size of its showroom and expects to spend $350,000 for an architect and building contractor to do the renovation. As part of the expansion plan, the company will be offering credit to its customers and thus expects accounts receivable to rise by $63,000.

Required:

For the project analysis, what amount should be used as the initial cash flow for net working capital?

A. -$70,000

B -$156,000

C. -$219,000

D. -$246,000

E. -$391,000

Note: Explain all steps comprehensively.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171917

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