Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018. Additional information: On December 31, 2018, Lebnas acquired 25% of Island ’s common stock for $609,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was $2,435,000. Island reported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019. During 2018, Lebnas loaned $797,500 to POI , an unrelated company. POI made the first semi-annual principal repayment of $72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019. On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash. On December 31, 2019, Lebnas entered into a finance lease for a new The present value of the annual rental payments is $1,232,500, which equals the fair value of the building. Lebnas will make the first rental payment of $174,000 on 1/2/2020. Note: The right of use asset is included in Property, Plant and Equipment on the balance sheet. Depreciation expense of $230,550 is included in Cost of Goods Sold. Lebnas declared and paid cash dividends as 2019 2018 Declared Paid Amount December 15, 2019 February 28, 2020 $145,000 December 15, 2018 February 28, 2019 $87,000 Required: Prepare a statement of cash flows for Lebnas Corp. for the year ended 12/31/2019, using the indirect method and good form, including footnote disclosures. Lebnas Corporation Balance Sheet As of 12/31 … 2019 2018 diff Cash 942,500 739,500 Accounts receivable 1,827,000 1,580,500 Inventory 2,230,100 1,986,500 Property, plant, and equipment 3,886,000 2,556,350 Accumulated depreciation (1,232,500) (1,102,000) Investment in Island Co. 688,750 609,000 Loan receivable 507,500 652,500 Total assets 8,849,350 7,022,350 Accounts payable 1,566,000 1,319,500 Income taxes payable 130,500 108,750 Dividends payable 145,000 87,000 Lease Liability 1,232,500 Common stock, $1 par 580,000 580,000 Paid-in capital in excess of par 3,045,000 3,045,000 Retained earnings 2,150,350 1,882,100 Total liabilities and stockholders’ equity 8,849,350 7,022,350 Lebnas Corporation Income Statement For the year … 2019 Sales 1,377,500 Cost of goods sold* (1,001,950) Gross profit 375,550 Loss on equipment sold (15,950) Investment income (Island Co.) 79,750 Income tax expense (26,100) Net Income 413,250 *Includes depreciation expense.

Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018. Additional information: On December 31, 2018, Lebnas acquired 25% of Island ’s common stock for $609,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was $2,435,000. Island reported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019. During 2018, Lebnas loaned $797,500 to POI , an unrelated company. POI made the first semi-annual principal repayment of $72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019. On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash. On December 31, 2019, Lebnas entered into a finance lease for a new The present value of the annual rental payments is $1,232,500, which equals the fair value of the building. Lebnas will make the first rental payment of $174,000 on 1/2/2020. Note: The right of use asset is included in Property, Plant and Equipment on the balance sheet. Depreciation expense of $230,550 is included in Cost of Goods Sold. Lebnas declared and paid cash dividends as 2019 2018 Declared Paid Amount December 15, 2019 February 28, 2020 $145,000 December 15, 2018 February 28, 2019 $87,000 Required: Prepare a statement of cash flows for Lebnas Corp. for the year ended 12/31/2019, using the indirect method and good form, including footnote disclosures. Lebnas Corporation Balance Sheet As of 12/31 … 2019 2018 diff Cash 942,500 739,500 Accounts receivable 1,827,000 1,580,500 Inventory 2,230,100 1,986,500 Property, plant, and equipment 3,886,000 2,556,350 Accumulated depreciation (1,232,500) (1,102,000) Investment in Island Co. 688,750 609,000 Loan receivable 507,500 652,500 Total assets 8,849,350 7,022,350 Accounts payable 1,566,000 1,319,500 Income taxes payable 130,500 108,750 Dividends payable 145,000 87,000 Lease Liability 1,232,500 Common stock, $1 par 580,000 580,000 Paid-in capital in excess of par 3,045,000 3,045,000 Retained earnings 2,150,350 1,882,100 Total liabilities and stockholders’ equity 8,849,350 7,022,350 Lebnas Corporation Income Statement For the year … 2019 Sales 1,377,500 Cost of goods sold* (1,001,950) Gross profit 375,550 Loss on equipment sold (15,950) Investment income (Island Co.) 79,750 Income tax expense (26,100) Net Income 413,250 *Includes depreciation expense.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Below are Lebnas Corp.’s 2019 income statement and comparative balance sheet at 12/31/2019 and 12/31/2018.

Additional information:

On December 31, 2018, Lebnas acquired 25% of Island ’s common stock for $609,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was $2,435,000. Island reported income of $319,000 for the year ended December 31, 2019. No dividend income was received by Lebnas on Island’s common stock during the year 2019.

During 2018, Lebnas loaned $797,500 to POI , an unrelated company. POI made the first semi-annual principal repayment of $72,500, plus interest at 10%, on December 31, 2018. POI is current on the loan as of December 31, 2019.

On January 2, 2019, Lebnas sold equipment costing $145,000, with a carrying amount of $44,950 for cash.

On December 31, 2019, Lebnas entered into a finance lease for a new The present value of the annual rental payments is $1,232,500, which equals the fair value of the building. Lebnas will make the first rental payment of $174,000 on 1/2/2020.

Note: The right of use asset is included in Property, Plant and Equipment on the balance sheet.

Depreciation expense of $230,550 is included in Cost of Goods Sold.

Lebnas declared and paid cash dividends as

2019

2018

Declared Paid Amount

December 15, 2019

February 28, 2020

$145,000

December 15, 2018

February 28, 2019

$87,000

Required: Prepare a statement of cash flows for Lebnas Corp. for the year ended 12/31/2019, using the indirect method and good form, including footnote disclosures.

Lebnas Corporation

Balance Sheet

As of 12/31 …

	2019	2018	diff
Cash	942,500	739,500
Accounts receivable	1,827,000	1,580,500
Inventory	2,230,100	1,986,500
Property, plant, and equipment	3,886,000	2,556,350
Accumulated depreciation	(1,232,500)	(1,102,000)
Investment in Island Co.	688,750	609,000
Loan receivable	507,500	652,500
Total assets	8,849,350	7,022,350

Accounts payable	1,566,000	1,319,500
Income taxes payable	130,500	108,750
Dividends payable	145,000	87,000
Lease Liability	1,232,500
Common stock, $1 par	580,000	580,000
Paid-in capital in excess of par	3,045,000	3,045,000
Retained earnings	2,150,350	1,882,100
Total liabilities and stockholders’ equity	8,849,350	7,022,350

Lebnas Corporation

Income Statement

For the year …

	2019
Sales	1,377,500
Cost of goods sold*	(1,001,950)
Gross profit	375,550
Loss on equipment sold	(15,950)
Investment income (Island Co.)	79,750
Income tax expense	(26,100)
Net Income	413,250

*Includes depreciation expense.

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