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Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018. Additional...

Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018.

Additional information:

  1. On December 31, 2018, Lebnas acquired 25% of Island Co.’s common stock for $609,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was

$2,435,000. Island reported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019.

  1. During 2018, Lebnas loaned $797,500 to POI Co., an unrelated company. POI made the first semi-annual principal repayment of

$72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019.

  1. On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash.
  1. On December 31, 2019, Lebnas entered into a finance lease for a new factory. The present value of the annual rental payments is

$1,232,500, which equals the fair value of the building. Lebnas will make the first rental payment of $174,000 on 1/2/2020.

Note: The capitalized leased asset under agreement is included in Property, Plant and Equipment on the balance sheet.

  1. Depreciation expense of $230,550 is included in Cost of Goods Sold.
  1. Lebnas declared and paid cash dividends as follows.

       2019                   2018       

Declared Paid Amount

December 15, 2019

February 28, 2020

$145,000

December 15, 2018

February 28, 2019

$87,000

Required: Prepare a statement of cash flows for Lebnas Corp. for the year ended 12/31/2019, using the indirect method and good form.

Lebnas Corporation Balance Sheet

As of 12/31 …

2019

2018

Cash

942,500

739,500

Accounts receivable

1,827,000

1,580,500

Inventory

2,230,100

1,986,500

Property, plant, and equipment

3,886,000

2,556,350

Accumulated depreciation

(1,232,500)

(1,102,000)

Investment in Island Co.

688,750

609,000

Loan receivable

507,500

652,500

Total assets

8,849,350

7,022,350

Accounts payable

1,566,000

1,319,500

Income taxes payable

130,500

108,750

Dividends payable

145,000

87,000

Capital lease obligation

1,232,500

Common stock, $1 par

580,000

580,000

Paid‐in capital in excess of par

3,045,000

3,045,000

Retained earnings

2,150,350

1,882,100

Total liabilities and stockholders’ equity

8,849,350

7,022,350

Lebnas Corporation Income Statement For the year …

2019

Sales

1,377,500

Cost of goods sold*

(1,001,950)

Gross profit

375,550

Loss on equipment sold

(15,950)

Investment income (Island Co.)

79,750

Income tax expense

(26,100)

Net Income

413,250

*Includes depreciation expense.

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