Answer -
Sullivan Corp. | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 2014 | ||
Net income | $365700 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | $147390 | |
Equity in earnings of Myers Co. | ($33690) | |
Gain on sale of equipment | ($3230) | |
Decrease in accounts receivable | $40800 | |
Increase in inventory | ($135100) | |
Increase in accounts payable | $61100 | |
Decrease in income taxes payable | ($19450) | |
$57820 | ||
Net cash provided by operating activities | $423520 | |
Cash flows from investing activities: | ||
Proceeds from sale of equipment | $39820 | |
Loan to TLC Co. | ($300580) | |
Principal payment of loan receivable | $50760 | |
Net cash used by investing activities | ($210000) | |
Cash flows from financing activities: | ||
Dividend paid | ($99670) | |
Net cash used by financing activities: | ($99670) | |
Net Increase in cash | $113850 | |
Cash January 1, 2014 | $700730 | |
Cash December 31, 2014 | $814580 |
Non-cash investing and financing activities: | |
Issuance of capital lease liability for office building | $399480 |
Calculation:
1. Depreciation for 2014
= Net increase in accumulated depreciation for the year ended December 31, 2014 + (Equipment sold cost - Equipment sold carrying value)
= $124900 + ($59080 - $36590)
= $147390
2. Gain on sale of equipment
= Proceeds - Carrying value
= $39820 - $36590
= $3230
3. Equity in earnings of Myers Co.
= Myers net income for 2014 * 25%
= $134760 * 25%
= $33960
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Here are comparative balance sheets for Velo Company.
Velo Company
Comparative Balance Sheets
December 31
Assets
2020
2019
Cash
$72,800
$33,200
Accounts receivable
86,500
70,700
Inventory
170,200
187,000
Land
72,700
100,700
Equipment
260,700
200,600
Accumulated depreciation—equipment
(65,700
)
(33,500
)
Total
$597,200
$558,700
Liabilities and Stockholders’ Equity
Accounts payable
$35,400
$46,500
Bonds payable
149,800
203,300
Common stock ($1 par)
218,000
173,000
Retained earnings
194,000
135,900
Total
$597,200
$558,700
Additional information:
1.
Net income for 2020 was $103,600.
2.
Cash dividends...
Velo Company
Comparative Balance Sheets
December 31
Assets
2020
2019
Cash
$72,800
$33,200
Accounts receivable
86,500
70,700
Inventory
170,200
187,000
Land
72,700
100,700
Equipment
260,700
200,600
Accumulated depreciation—equipment
(65,700
)
(33,500
)
Total
$597,200
$558,700
Liabilities and Stockholders’ Equity
Accounts payable
$35,400
$46,500
Bonds payable
149,800
203,300
Common stock ($1 par)
218,000
173,000
Retained earnings
194,000
135,900
Total
$597,200
$558,700
Additional information:
1.
Net income for 2020 was $103,600.
2.
Cash dividends of $45,500 were declared and paid.
3.
Bonds...
Velo Company
Comparative Balance Sheets
December 31
Assets
2020
2019
Cash
$72,800
$33,200
Accounts receivable
86,500
70,700
Inventory
170,200
187,000
Land
72,700
100,700
Equipment
260,700
200,600
Accumulated depreciation—equipment
(65,700
)
(33,500
)
Total
$597,200
$558,700
Liabilities and Stockholders’ Equity
Accounts payable
$35,400
$46,500
Bonds payable
149,800
203,300
Common stock ($1 par)
218,000
173,000
Retained earnings
194,000
135,900
Total
$597,200
$558,700
Additional information:
1.
Net income for 2020 was $103,600.
2.
Cash dividends of $45,500 were declared and paid.
3.
Bonds...