Question

Problem 5-6 Cheyenne Inc. had the following balance sheet at December 31, 2019. Cash Accounts receivable Investments Plant assets (net) Land CHEYENNE INC. BALANCE SHEET DECEMBER 31, 2019 $20,990 Accounts payable 22,190 Notes payable (long-term) 32,990 Common stock 81,000 Retained earnings 40,990 $198,160 $30,990 41,990 100,990 24,190 $198,160 During 2020, the following occurred. 1. 2. 3. Cheyenne Inc. sold part of its debt investment portfolio for $15,071. This transaction resulted in a gain of $3,471 for the firm. The company classifies these investments as available-for-sale. A tract of land was purchased for $13,990 cash. Long-term notes payable in the amount of $16,071 were retired before maturity by paying $16,071 cash. An additional $20,071 in common stock was issued at par. Dividends of $8,271 were declared and paid to stockholders. Net income for 2020 was $32,990 after allowing for depreciation of $11,071. Land was purchased through the issuance of $35,990 in bonds. At December 31, 2020, Cash was $37,990, Accounts Receivable was $42,590, and Accounts Payable remained at $30,990. 5. 6. 7. 8.

Answer 1

Cash Flow Statement
Indirect Method
Cash Flow from Operating Activities
Net Income		$           32,990
Adjustments
Depreciation	$               11,071
Gain on sale of investment	$               (3,471)
Changes in Current Assets/ Current Liabilities
Increase in Accounts Receivable	$             (20,400)
Total Adjustments		$        (12,800)
Net Cash from Operating Activities			$              20,190
Cash flow from Investing Activities
Sale of Investment		$           15,071
Purchase of Land		$        (13,990)
Net cash from investing activities			$                1,081
Cash flow from Financing Activities
Issue of Common Stock		$           20,071
Repayment of long term notes		$        (16,071)
Dividend Paid		$           (8,271)
Net cash used in financing activities			$              (4,271)
Increase in Cash			$              17,000
Opening Balance of Cash			$              20,990
Closing Balance of Cash			$              37,990
Non Cash Investing and Financing Activities
Land Purchase through issuance of $35990 of bonds

Balance Sheet
Assets
Cash	$               37,990
Accounts Receivable	$               42,590
Investments	$               21,390
Plant Assets (Net)	$               69,929
Land	$               90,970
Total Assets	$             262,869
Liabilities and Stockholder's Equity
Accounts Payable	$               30,990
Notes Payable (Long Term)	$               25,919
Bonds Payable	$               35,990
Common Stock	$             121,061
Retained Earnings	$               48,909
Total Liabilities and Stockholder's Equity	$             262,869

Current Cash Debt coverage ratio = Net cash provided by operating activities / Current liabilities
= $20190 / 30990 = 0.65 : 1

Cash Debt Coverage Ratio = Net cash provided by operating activities / Total liabilities
= $20190 / 92899 = 0.22 : 1

Answer 2

How did you calculate the retained earmings, investment, pnat asstest and land in the balance sheet?