Question

Following is a partially completed balance sheet for Hoeman, Inc., at December 31, 2017, together with comparative data for the year ended December 31, 2016. From the statement of cash flows for the year ended December 31, 2017, you determine the following:

Net income for the year ended December 31, 2017, was $94,000.

Dividends paid during the year ended December 31, 2017, were $63,000.

Accounts receivable decreased $14,500 during the year ended December 31, 2017.

The cost of new buildings acquired during 2017 was $128,500.

No buildings were disposed of during 2017.

The land account was not affected by any transactions during the year, but the fair value of the land at December 31, 2017, was $183,000.

Required:  

a. Complete the December 31, 2017, balance sheet. (Hint: Long-term debt is the last number to compute to make the balance sheet balance.)

HOEMAN, INC. Comparative Balance Sheets At December 31, 2017 and 2016 2017 2016 Assets: Current assets: Cash $52,500 $49,000 Accounts receivable 145,500 Inventory 167,500 195,000 Total current assets $389,500 Land 142,000 Buildings 274,500 Less: Accumulated depreciation (122,000) (106,000) Total land & buildings $310,500 Total assets $700,000 Liabilities: Current liabilities: Accounts payable $189,500 Note payable 163,000 127,500 Total current liabilities $330,000 $317,000 Long-term debt $150,500 Stockholders' Equity: Common stock $51,500 $48,500 Retained earnings 184,000 Total stockholders' equity $232,500 Total liabilities and stockholders' equity $700,000

b. Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

a.

HOEMAN, INC.
Comparative Balance Sheets
At December 31, 2017 and 2016
	2017	2016
Assets:
Current assets:
Cash	52500	49000
Accounts receivable (145500 - 14500)	131000	145500
Inventory	167500	195000
Total current assets	351000	389500
Land	142000	142000
Buildings (274500 + 128500)	403000	274500
Less: Accumulated depreciation	-122000	-106000
Total land & buildings	423000	310500
Total assets	774000	700000
Liabilities:
Current liabilities:
Accounts payable (330000 - 163000)	167000	189500
Note payable	163000	127500
Total current liabilities	330000	317000
Long-term debt (774000 - 330000 - 266500)	177500	150500
Stockholders' Equity:
Common stock	51500	48500
Retained Earnings (184000 + 94000 - 63000)	215000	184000
Total stockholders' equity	266500	232500
Total liabilities and stockholders' equity	774000	700000

b.

HOEMAN, INC.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities:
Net income		94000
Add (deduct) items not affecting cash:
Depreciation expense (122000 - 106000)	16000
Decrease in Accounts receivable	14500
Decrease in Inventory (195000 - 167500)	27500
Decrease in Accounts payable (189500 - 167000)	-22500	35500
Net cash provided by operating activities		129500
Cash flows from investing activities:
New buildings acquired	-128500
Net cash used in investing activities		-128500
Cash flows from financing activities:
Increase in notes payable (163000 - 127500)	35500
Dividends paid	-63000
Increase in long-term debt (177500 - 150500)	27000
Issue of common stock (51500 - 48500)	3000
Net cash provided by financing activities		2500
Net increase (decrease) in cash		3500
Cash balance, January 1, 2017		49000
Cash balance, December 31, 2017		52500