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Balance Sheet
Year 2 Year 1 Cash 3,000 2, Accounts receivable 8,000 9, Prepaid rent 6,000 7, Inventory 16,200 14, Land 50,000 30, Buildings and equipment 70,500 30, Accumulated Depreciation (30,000) (26,700) Total Assets 123,700^ 66, Accounts payable 8,400 7, Taxes payble 4,900 6, Dividends payable 1,100 850 Long-term debt 63,600 13, Common Stock 18,000 12, Retained Earnings 27,700 26, Total Liabilities and Equity 123,700 66, Income Statement for Year 2 Sales 55, Loss on the sale of equipment (600) Cost of goods sold (32,500) Selling and administrative expense (4,100) Rent expense (6,000) Depreciation expense (5,300) Income Tax Expense (2,400) Net Income (^) 4, a. All accounts payable relate to inventory purchases. b. Equipment with a book value of $12,300 was sold during Year 2. c. Hagan received a machine costing $2,000 from a shareholder in exchange for additional shares of comm d. Hagan purchased land for cash. Operating Section Calculations: Income Accounts Statement Adjustments Sales 55,600 1,
Loss on the sale of equipment (600) 600 Cost of goods sold (32,500) (700) Selling and administrative expense (4,100) Rent expense (6,000) 1, Depreciation expense (5,300) 5, Income Tax Expense (2,400) (1,400) Net Income 4, Investing Section Calculations: Buildings and equipment BB 30, Equip for Stock 2, Purch for Cash 52, EB 70, Land BB 30, Purchase 20, EB 50, Financing Section Calculations: Dividends Payable Dividends Paid 2, Long-term debt
Change Section Adjustment Absolute value 1, (1,400) O + 1, (1,000) O + 1, 1,900 O - 1, 20,000 I 40,500 I (3,300) I 1,200 O + 1, (1,400) O - 1, 250 F 50,000 F 6,000 F 1,650 O/F ange for additional shares of common stock. Statement of CF 57,000 Cash received from customers
(33,200) Cash paid for inventory (4,100) Cash paid for S&A expenses (5,000) Cash paid for rent 0 (3,800) Cash paid for taxes 10,900 Operating Cash Flows Proceeds 11,
- BV (12,300) Accumulated Gain/(Loss) (600) ildings and equipment Depreciation 26,700 BB 5,300 Depr. Expense 14,300 2, Cash 30,000 EB Accumulated Depreciation BV = 12,300 Loss on sale Buildings and equipment Buildings and equipment Land Cash Land Cash Dividends Payable Retained Earnings 850 BB 26,050 BB 4,700 NI Dividends Payable 3,050 Dividends Declared 3,050 Cash 1,100 EB 27,700 EB Long-term debt 13,600 BB Cash 50,000 Cash from long-term debt issuance Long-term debt
Cash flows from operating activities: Statement of Cash Flows Cash flows from operating activities:
Cash flows from investing activities: Cash flows from financing activities: Net change in cash Plus beginning balance Ending cash balance 11, 2, 600 Buildings and equipment 14, 52, 52, 20, 20, 2, 2, 50, Long-term debt 50,
Cash flows from operating activities: Net income 4, Plus Depreciation expense 5, Plus loss on the sale of equipment 600 Plus the decrease in accounts receivable 1, Plus the decrease in prepaid rent 1, Minus the increase in inventory (1,900) Plus the increase in accounts payable 1, Minus the decrease in taxes payable (1,400) 10, Statement of Cash Flows Cash flows from operating activities: Cash received from customers 57, Cash paid for inventory (33,200) Cash paid for selling and administrative expenses (4,100) Cash paid for rent (5,000) Cah paid for taxes (3,800)
Cash flows from investing activities: Cash received from the sale of equipment 11, Cash paid for the purchase of equipment (52,800) Cash paid to purchase land (20,000) (61,100) Cash flows from financing activities: Cash received from issuing stock 4, Cash received from the issuance of long-term debt 50, Cash paid for dividends (2,800) 51, Net change in cash 1, Plus beginning balance 2, Ending cash balance 3,
