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 1 year 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
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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
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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
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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...
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statement of income for 2018 are given below for Dux Company.
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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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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
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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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