Question

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Following is a partially completed balance sheet for Hoeman Inc. at December 31, 2020, together with comparative data for the year ended December 31, 2019. From the statement of cash flows for the year ended December 31, 2020, you determine the following: . Net income for the year ended December 31, 2020, was $98,500. . Dividends paid during the year ended December 31, 2020, were $63,000. Accounts receivable decreased $12,500 during the year ended December 31, 2020. The cost of new buildings acquired during 2020 was $127,000. . No buildings were disposed of during 2020. The land account was not affected by any transactions during the year, but the fair value of the land at December 31, 2020, was $188,000. Requlred: a. Complete the December 31, 2020, balance sheet. (Hint: Long-term debt is the last number to compute to make the balance sheet balance.) b. Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method

Answer 1

Balance Sheet | 2020 2019 Variance Assets Current Assets: Cash Accounts Receivable Inventory Total Current Assets $ 55,500 $ 47,500 $ 8,000 $ 121,500 $ 134,000 $ (12,500) $ 164,000 $ 194,500 $ (30,500) $ 341,000 $ 376,000 Land is shown at hostorical cost on the Balance sheet and market value is disrearded, as it is assumed that Land is $ 140,500 $ 140,500 $ - acquire to use in business and not held for sale. $ 413,500 $ 286,500 $127,000 $(128,000) $(112,000) $ (16,000) $ 426,000 $315,000 Land Buildings Less: Accumulated Depreciation Total Land & Buildings Total Assets $ 767,000 $ 691,000

Liabilities Current Liabilities Accounts Payable Note payable Total Current Liabilities Long term debt Shareholder's Equity Common Stock Retained Earnings* Total Shareholder's Equity $ 170,500 $ 193,000 $ (22,500) $ 160,000 $ 125,500 $ 34,500 $ 330,500 $ 318,500 $ 170,000 $ 149,500 $ 20,500 $ 54,000 $ 46,000 $ 8,000 $ 212,500 $ 177,000 $ 35,500 $ 266,500 $ 223,000 Total Liabilities & Shareholder's Equity $ 767,000 $ 691,000 $ - $ - *Calculation of Closing Retained Earnings: Opening Retained Earnings Add: Net income for 2020 Less: Dividend paid Closing Retained Earnings $ 177,000 $ 98,500 $ (63,000) $ 212,500

Cash Flow $ 98,500 $ 16,000 $ 114,500 Net income Add/Deduct: Items not affecting cash Depreciaton Adjusted Operating income Add/Deduct: Working capital changes Decrease in Accounts Receivable Decrease in Inventory Decrease in Accounts Payable Increase in Note payable Cash Flow from Operating Activity-A $ 12,500 $ 30,500 $ 22,500) $ 34,500 $ 169,500 Purchase of Building Cash Flow from Investing Activity-B $(127,000) $(127,000) Increase in Long term Debt Issuance of Shares Dividend paid Cash Flow from Financing Activity-C $ 20,500 $ 8,000 $ (63,000) $ (34,500) Net Cash Flow during the year (A+B+C) $ 8,000

Add: Opening Cash Balance $ 47,500 Closing Cash Balance $ 55,500