In: Accounting
Problem 23-01
The following are Shamrock Corp.’s comparative balance sheet accounts at December 31, 2020 and 2019, with a column showing the increase (decrease) from 2019 to 2020.
COMPARATIVE BALANCE SHEETS |
|||||||||
2020 |
2019 |
Increase |
|||||||
Cash |
$811,100 |
$702,700 |
$108,400 |
||||||
Accounts receivable |
1,139,100 |
1,176,000 |
(36,900 |
) |
|||||
Inventory |
1,847,000 |
1,704,500 |
142,500 |
||||||
Property, plant, and equipment |
3,317,700 |
2,945,400 |
372,300 |
||||||
Accumulated depreciation |
(1,158,000 |
) |
(1,048,400 |
) |
(109,600 |
) |
|||
Investment in Myers Co. |
312,200 |
274,000 |
38,200 |
||||||
Loan receivable |
250,000 |
— |
250,000 |
||||||
Total assets |
$6,519,100 |
$5,754,200 |
$764,900 |
||||||
Accounts payable |
$1,010,900 |
$960,700 |
$50,200 |
||||||
Income taxes payable |
29,900 |
50,500 |
(20,600 |
) |
|||||
Dividends payable |
80,600 |
100,700 |
(20,100 |
) |
|||||
Lease liabililty |
432,100 |
— |
432,100 |
||||||
Common stock, $1 par |
500,000 |
500,000 |
— |
||||||
Paid-in capital in excess of par—common stock |
1,499,300 |
1,499,300 |
— |
||||||
Retained earnings |
2,966,300 |
2,643,000 |
323,300 |
||||||
Total liabilities and stockholders’ equity |
$6,519,100 |
$5,754,200 |
$764,900 |
Additional information:
1. |
On December 31, 2019, Shamrock acquired 25% of Myers Co.’s common stock for $274,000. On that date, the carrying value of Myers’s assets and liabilities, which approximated their fair values, was $1,096,000. Myers reported income of $152,800 for the year ended December 31, 2020. No dividend was paid on Myers’s common stock during the year. |
|
2. |
During 2020, Shamrock loaned $332,200 to TLC Co., an unrelated company. TLC made the first semiannual principal repayment of $82,200, plus interest at 10%, on December 31, 2020. |
|
3. |
On January 2, 2020, Shamrock sold equipment costing $59,800, with a carrying amount of $38,000, for $40,100 cash. |
|
4. |
On December 31, 2020, Shamrock entered into a capital lease for an office building. The present value of the annual rental payments is $432,100, which equals the fair value of the building. Shamrock made the first rental payment of $60,300 when due on January 2, 2021. |
|
5. |
Net income for 2020 was $403,900. |
|
6. |
Shamrock declared and paid the following cash dividends for 2020 and 2019. |
2020 |
2019 |
|||
Declared |
December 15, 2020 |
December 15, 2019 |
||
Paid |
February 28, 2021 |
February 28, 2020 |
||
Amount |
$80,600 |
$100,700 |
Prepare a statement of cash flows for Shamrock Corp. for the year
ended December 31, 2020, using the indirect method