Question
In: Accounting
Hartman, Inc. has prepared the following comparative balance sheets for 2017 and 2018:  
Hartman, Inc. has prepared the following comparative balance sheets for 2017 and 2018:
2018 2017
Cash $ 282,000 $ 153,000
Accounts receivable 139,000 117,000
Inventory 150,000 180,000
Prepaid expenses 18,000 27,000
Plant assets 1,295,000 1,050,000
Accumulated depreciation (450,000) (375,000)
Patent 153,000 174,000
$1,587,000 $1,326,000
Accounts payable $ 153,000 $ 168,000
Accrued liabilities 60,000 42,000
Mortgage payable — 450,000
Preferred stock 525,000 —
Additional paid-in capital—preferred 120,000 —
Common stock 600,000 600,000
Retained earnings 129,000 66,000
$1,587,000 $1,326,000
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earnings account has been charged for dividends of $138,000 and credited for the net income for the year.
The income statement for 2018 is as follows:
Sales revenue $1,980,000
Cost of sales 1,089,000
Gross profit 891,000
Operating expenses 690,000
Net income $ 201,000
Instructions
(a) From the information above, prepare a statement of cash flows (indirect method) for Hartman, Inc. for the year ended December 31, 2018.
(b) From the information above, prepare a schedule of cash provided by operating activities using the direct method.
Solutions
Expert Solution
| a) Cash flow statement: Indirect Method | Ledger Working | ||||||||
| Cash flows from operating activities: | Working | Amount $ | Retained earning A/C | ||||||
| Profit before tax | $ 201,000.00 | 2017 | Opening balance | $ 66,000.00 | |||||
| Adjustments: | 2018 | Dividend paid | $ 138,000.00 | 2018 | Net income | $ 201,000.00 | |||
| Depreciation | $ 75,000.00 | ||||||||
| Operating profit from before working capital changes | $ 276,000.00 | 2018 | Closing balance | $ 129,000.00 | |||||
| Accounts receivable (increase)/decrease | $ (22,000.00) | ||||||||
| Inventory (increase)/decrease | $ 30,000.00 | $ 267,000.00 | $ 267,000.00 | ||||||
| Prepaid expense (increase)/decrease | $ 9,000.00 | ||||||||
| Account payable (decrease)/increase | $ (15,000.00) | Plant assets | |||||||
| Accrued liabilities (decrease)/increase | $ 18,000.00 | 2017 | Opening balance | $ 675,000.00 | |||||
| Cash generation from operation | $ 296,000.00 | 2018 | Depreciation | $ 75,000.00 | 2018 | Addition to Plant assets | $ 245,000.00 | ||
| Income tax paid | $ - | ||||||||
| Net cash provided by operating activities | $ 296,000.00 | 2018 | Closing balance | $ 845,000.00 | |||||
| Cash flows from investing activities: | $ 920,000.00 | $ 920,000.00 | |||||||
| Nat proceeds/(Purchase) of plant & equipment | $ (245,000.00) | Account receivable | |||||||
| Nat proceeds/(Purchase) of Patent | $ 21,000.00 | 2017 | Opening balance | $ 117,000.00 | |||||
| Net cash used in investing activities | $ (224,000.00) | 2018 | Sales | $ 1,980,000.00 | 2018 | Cash collection | $ 1,958,000.00 | ||
| 2018 | Closing balance | $ 139,000.00 | |||||||
| Cash flows from financing activities: | $ 2,097,000.00 | $ 2,097,000.00 | |||||||
| Nat proceeds/(Repayment))of Mortgage | $ (450,000.00) | ||||||||
| Nat proceeds/(Repayment))of Issue of preferred stock | $ 525,000.00 | Account payable | |||||||
| Nat proceeds/(Repayment))of Issue of Additional paid up stock | $ 120,000.00 | 2017 | Opening balance | $ 168,000.00 | |||||
| Dividend paid | $ (138,000.00) | 2018 | Cash Paid | $ 1,074,000.00 | 2018 | Purchases | $ 1,059,000.00 | ||
| 2018 | Closing balance | $ 153,000.00 | |||||||
| Net cash provided by financing activities | $ 57,000.00 | $ 1,227,000.00 | $ 1,227,000.00 | ||||||
| Net increase in cash | $ 129,000.00 | Inventory | |||||||
| Opening Cash balance, 2018 | $ 153,000.00 | 2017 | Opening balance | $ 180,000.00 | |||||
| Closing Cash balance, 2018 | $ 282,000.00 | 2018 | Purchases | $ 1,059,000.00 | 2018 | Cost of sales | $ 1,089,000.00 | ||
| 2018 | Closing balance | $ 150,000.00 | |||||||
| $ 1,239,000.00 | $ 1,239,000.00 | ||||||||
| Cashflow from Operating activities under Direct Method |
 ekkarill92 answered 2 years agoRelated SolutionsHartman, Inc. has prepared the following comparative balance sheets for 2019 and 2018:  Hartman, Inc. has prepared the following comparative balance
sheets for 2019 and 2018:
2019
2018
Cash
$
297,000
$ 153,000
Receivables
159,000
117,000
Inventory
150,000
180,000
Prepaid
expenses
18,000
27,000
Plant
assets
1,260,000
1,050,000
Accumulated
depreciation
(450,000)
(375,000)
Patent
153,000
174,000
Total
$1,587,000
$1,326,000
Accounts
payable
$
153,000
$ 168,000
Accrued
liabilities
60,000
42,000
Mortgage
payable
—
450,000
Preferred
stock
525,000
—
...
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for 2018 and 2017:
2018
2017 Change
Cash
$ 96,000
$ 108,000 12,000
Receivables
47,000
49,000
2,000
Inventory
110,000
100,000 10,000
Office
Supplies
8,000
12,000 4,000
Plant assets, net
380,000
300,000 80,000
Long term Investment 126,000
84,000
42,000
$ 767,000
$ 653,000
Accounts
payable $102,000
$
98,000 4,000
Accrued
liabilities
40,000
14,000 26,000...
Denver, Inc. has prepared the following comparative balance sheets for 20x0 and 20x1:Denver, Inc. has prepared the following comparative balance
sheets for 20x0 and 20x1:
20x1
20x0
Cash
75,000
51,000
A/R
48,000
39,000
Inventory
54,000
60,000
Prepaid
Expense
6,000
9,000
Building
440,000
350,000
Accum. Depr.
(145,000)
(125,000)
Copyright
51,000
58,000
A/P
51,000
56,000
Accrued
Liabilities
18,000
14,000
Mortgage
Payable
-
150,000
Preferred
Stock
175,000
-
APIC –
Pref.
30,000
-
Common
Stock
200,000
200,000
R/E
55,000
22,000
The R/E...
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statement of income for 2018 are given below for Dux Company.
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
33
$
20
Accounts receivable
48
50
Less: Allowance for uncollectible accounts
(4
)
(3
)
Dividends receivable
3
2
Inventory
55
50
Long-term investment
15
10
Land
70
40
Buildings and...
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018
2017
Assets
Cash
$
106
$
95
Accounts receivable
280
275
Less: Allowance for uncollectible accounts
(8
)
(6
)
Prepaid insurance
4
10
Inventory
262
255
Long-term investment
50
75
Land
180
180...
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018 2017
Assets
Cash $ 47 $ 27
Accounts receivable 51 61
Less: Allowance for uncollectible accounts (3 ) (2 )
Dividends receivable 5 4
Inventory 69 57
Long-term investment 29 17
Land 96 50
Buildings and...
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statement of income for 2018 are given below for Dux Company.
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
121
$
40
Accounts receivable
43
71
Less: Allowance for uncollectible accounts
(5
)
(4
)
Dividends receivable
4
3
Inventory
100
95
Long-term investment
54
50
Land
95
85
Buildings and...
The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are...The comparative balance sheets for 2018 and 2017 and the
statement of income for 2018 are given below for Dux Company.
Additional information from Dux’s accounting records is provided
also.
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
52
$
31
Accounts receivable
41
78
Less: Allowance for uncollectible accounts
(3
)
(2
)
Dividends receivable
4
3
Inventory
100
95
Long-term investment
54
50
Land
95
85
Buildings and...
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The comparative balance sheets for 2018 and 2017 and the
statement of income for 2018 are given below for Dux Company.
Additional information from Dux’s accounting records is provided
also.
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018
2017
Assets
Cash
$
47
$
27
Accounts receivable
51
61
Less: Allowance for uncollectible accounts
(3
)
(2
)
Dividends receivable
5
4
Inventory
69
57
Long-term investment
29
17
Land
96
50
Buildings and...
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The comparative balance sheets for 2018 and 2017 and the
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Comparative Balance Sheets
December 31, 2018 and 2017
($ in 000s)
2018 2017
Assets
Cash $ 143 $ 130
Accounts receivable 171 175
Short-term investment 70 30
Inventory 175 170
Land 130 160
Buildings and equipment 800 600
Less: Accumulated depreciation (235 ) (175 )
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