Do It! Review 12-2b Sunland Company Comparative Balance Sheets December 31 Chang

ID: 2593308 • Letter: D

Question

Do It! Review 12-2b

Sunland Company
Comparative Balance Sheets
December 31

Change
Increase/Decrease

Sunland Company
Income Statement
For the Year Ended December 31, 2019

Adjustments to reconcile net income to

Do It! Review 12-2b

Sunland Company reported the following information for 2019.

Sunland Company
Comparative Balance Sheets
December 31

Assets 2019 2018

Change
Increase/Decrease

Cash $68,040 $36,250 $31,790 Increase Accounts receivable 61,900 21,810 40,090 Increase Inventory 44,110 –0– 44,110 Increase Prepaid expenses 6,030 4,010 2,020 Increase Land 54,890 69,300 14,410 Decrease Buildings 200,420 200,420 –0– Accumulated depreciation—buildings (20,805 ) (13,870 ) 6,935 Increase Equipment 181,270 67,510 113,760 Increase Accumulated depreciation—equipment (28,695 ) (10,030 ) 18,665 Increase Totals $567,160 $375,400 Liabilities and Stockholders’ Equity Accounts payable $43,320 $40,150 $3,170 Increase Accrued expenses payable 0 10,080 10,080 Decrease Bonds payable 100,980 150,840 49,860 Decrease Common stock ($1 par) 230,850 59,550 171,300 Increase Retained earnings 192,010 114,780 77,230 Increase Totals $567,160 $375,400

Sunland Company
Income Statement
For the Year Ended December 31, 2019

Sales revenue $947,640 Cost of goods sold $475,040 Operating expenses 231,230 Interest expense 12,110 Loss on disposal of plant assets
2,000 720,380 Income before income taxes 227,260 Income tax expense 65,190 Net income $162,070 Additional information: 1. Operating expenses include depreciation expense of $40,190. 2. Land was sold at its book value for cash. 3. Cash dividends of $84,840 were declared and paid in 2019. 4. Equipment with a cost of $164,590 was purchased for cash. Equipment with a cost of $50,830 and a book value of $36,240 was sold for $34,240 cash. 5. Bonds of $49,860 were redeemed at their face value for cash. 6. Common stock ($1 par) of $171,300 was issued for cash.
Use this information to prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Sunland Company
Statement of Cash Flows—Indirect Method

December 31, 2019For the Year Ended December 31, 2019For the Quarter Ended December 31, 2019

Cash at Beginning of PeriodCash at End of PeriodCash Flows from Financing ActivitiesCash Flows from Investing ActivitiesCash Flows from Operating ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Provided by Operating ActivitiesNet Cash used by Financing ActivitiesNet Cash used by Investing ActivitiesNet Cash used by Operating ActivitiesNet Decrease in CashNet Increase in Cash

Decrease in Accounts Payable Decrease in Accounts Receivable Decrease in Accrued Expenses Payable Decrease in Inventory Decrease in Prepaid Expenses Depreciation Expense Gain on Disposal of Equipment Increase in Accounts Payable Increase in Accounts Receivable Increase in Accrued Expenses Payable Increase in Inventory Increase in Prepaid Expenses Loss on Disposal of Plant Assets Net Income Payment of Dividends Purchase of Equipment Redemption of Bonds Sale of Common Stock Sale of Equipment Sale of Land

Adjustments to reconcile net income to

Cash at Beginning of Period Cash at End of Period Cash Flows from Financing Activities Cash Flows from Investing Activities Cash Flows from Operating Activities Net Cash Provided by Financing Activities Net Cash Provided by Investing Activities Net Cash Provided by Operating Activities Net Cash used by Financing Activities Net Cash used by Investing Activities Net Cash used by Operating Activities Net Decrease in Cash Net Increase in Cash

Explanation / Answer

Particulars

Net Income

162070

Adjustments:

Depreciation expense

40190

Loss on disposal of plant assets

2000

Increase in Accounts receivable

-40090

Increase in inventory

-44110

Increase in Prepaid expenses

-2020

Increase in Accounts Payable

3170

Decrease in Accrued expense Payable

-10080

-50940

Cash flows from operating activities

111130

Cash flows from Investing Activities

Purchase of equipment

-164590

Sale of equipment

34240

Sale of Land

14410

Cash flows from investing activities

-115940

Cash flow from Financing Activities

Redemption of Bonds

-49860

Proceeds from issuance of common stock

171300

Dividends Paid

-84840

36600

Net increase in cash

31790

Cash at beginning of period

36250

Cash at the end of the period

68040