1) The comparative balance sheets for Sunland Company as of December 31 are presented below. Sunland...

1) The comparative balance sheets for Sunland Company as of December 31 are presented below.

Sunland Company Comparative Balance Sheets December 31
Assets	2017		2016
Cash	$ 80,104		$ 53,010
Accounts receivable	58,900		68,324
Inventory	178,408		167,276
Prepaid expenses	18,000		24,738
Land	170,810		153,140
Buildings	235,600		235,600
Accumulated depreciation—buildings	(70,680	)	(47,120	)
Equipment	265,050		182,590
Accumulated depreciation—equipment	(53,010	)	(41,230	)
Total	$883,182		$796,328

Liabilities and Stockholders’ Equity
Accounts payable	$ 52,692		$ 42,408
Bonds payable	353,400		353,400
Common stock, $1 par	235,600		188,480
Retained earnings	241,490		212,040
Total	$883,182		$796,328

Additional information:

1.		Operating expenses include depreciation expense of $49,476.
2.		Land was sold for cash at book value.
3.		Cash dividends of $14,136 were paid.
4.		Net income for 2017 was $43,586.
5.		Equipment was purchased for $108,376 cash. In addition, equipment costing $25,916 with a book value of $11,780 was sold for $9,424 cash.
6.		47,120 shares of $1 par value common stock were issued in exchange for land with a fair value of $47,120.

Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

2) Condensed financial data of Ivanhoe Company follow.

Ivanhoe Company Comparative Balance Sheets December 31
Assets	2017		2016
Cash	$ 92,920		$ 55,660
Accounts receivable	100,970		43,700
Inventory	129,375		118,278
Prepaid expenses	32,660		29,900
Long-term investments	158,700		125,350
Plant assets	327,750		278,875
Accumulated depreciation	(57,500	)	(59,800	)
Total	$784,875		$591,963

Liabilities and Stockholders’ Equity
Accounts payable	$ 117,300		$ 77,395
Accrued expenses payable	18,975		24,150
Bonds payable	126,500		167,900
Common stock	253,000		201,250
Retained earnings	269,100		121,268
Total	$784,875		$591,963

Ivanhoe Company Income Statement Data For the Year Ended December 31, 2017
Sales revenue		$446,729
Less:
Cost of goods sold	$155,779
Operating expenses, excluding depreciation	14,272
Depreciation expense	53,475
Income tax expense	31,372
Interest expense	5,440
Loss on disposal of plant assets	8,625	268,963
Net income		$ 177,766

Additional information:

1.		New plant assets costing $115,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $66,125 and accumulated depreciation of $55,775 were sold for $1,725 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $29,934 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Solutions

Expert Solution

Answer to Question 1:

Purchase of Land = $47,120

Land, Dec. 31, 2017 = Land, Dec. 31, 2016 + Land purchased - Land Sold
$170,810 = $153,140 + $47,120 - Land Sold
Land Sold = $29,450

Loss on Sale of Equipment = Book Value - Proceed from Sale
Loss on Sale of Equipment = $11,780 - $9,424
Loss on Sale of Equipment = $2,356

ekkarill92 answered 1 year ago

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