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P5.6 (LO 2, 3) Excel Inc. had the following balance sheet at December 31, 2019. (Preparation of a Statement of Cash Flows and a Balance Sheet) Lansbury Lansbury Inc. Balance Sheet December 31, 2019 $ 30,000 Accounts payable Notes payable (long-term) Cash $ 20,000 Accounts receivable 21,200 41,000 Investments 32,000 Common stock 100,000 Plant assets (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200 $194,200 During 2020, the following occurred. 1. Lansbury Inc. sold part of its debt investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies these investme nts as available-for-sale. 2. A tract of land was purchased for $13,000 cash. 3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash.

P5.6 (LO 2, 3) Excel Inc. had the following balance sheet at December 31, 2019. (Preparation of a Statement of Cash Flows and a Balance Sheet) Lansbury Lansbury Inc. Balance Sheet December 31, 2019 $ 30,000 Accounts payable Notes payable (long-term) Cash $ 20,000 Accounts receivable 21,200 41,000 Investments 32,000 Common stock 100,000 Plant assets (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200 $194,200 During 2020, the following occurred. 1. Lansbury Inc. sold part of its debt investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies these investme nts as available-for-sale. 2. A tract of land was purchased for $13,000 cash. 3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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P5.6
### Lansbury Inc. Balance Sheet Analysis The following information pertains to Lansbury Inc.'s balance sheet as of December 31, 2019. #### Balance Sheet Summary: - **Assets:** - Cash: $20,000 - Accounts Receivable: $21,200 - Investments: $32,000 - Plant Assets (net): $81,000 - Land: $40,000 - **Total Assets:** $194,200 - **Liabilities and Equity:** - Accounts Payable: $30,000 - Notes Payable (long-term): $41,000 - Common Stock: $100,000 - Retained Earnings: $23,200 - **Total Liabilities and Equity:** $194,200 #### Events During 2020: 1. **Investment Transactions:** - Lansbury Inc. sold part of its debt investment portfolio for $15,000. This transaction resulted in a gain of $3,400. These investments were classified as available-for-sale. 2. **Land Acquisition:** - A tract of land was purchased for $13,000 in cash. 3. **Notes Payable:** - Long-term notes payable of $16,000 were retired before maturity by paying $16,000 in cash. This balance sheet provides a snapshot of the company's financial position at the end of 2019, detailing its assets alongside its liabilities and shareholders' equity. The events in 2020 reflect strategic financial movements, such as asset sales and debt retirement.
Transcribed Image Text:### Lansbury Inc. Balance Sheet Analysis The following information pertains to Lansbury Inc.'s balance sheet as of December 31, 2019. #### Balance Sheet Summary: - **Assets:** - Cash: $20,000 - Accounts Receivable: $21,200 - Investments: $32,000 - Plant Assets (net): $81,000 - Land: $40,000 - **Total Assets:** $194,200 - **Liabilities and Equity:** - Accounts Payable: $30,000 - Notes Payable (long-term): $41,000 - Common Stock: $100,000 - Retained Earnings: $23,200 - **Total Liabilities and Equity:** $194,200 #### Events During 2020: 1. **Investment Transactions:** - Lansbury Inc. sold part of its debt investment portfolio for $15,000. This transaction resulted in a gain of $3,400. These investments were classified as available-for-sale. 2. **Land Acquisition:** - A tract of land was purchased for $13,000 in cash. 3. **Notes Payable:** - Long-term notes payable of $16,000 were retired before maturity by paying $16,000 in cash. This balance sheet provides a snapshot of the company's financial position at the end of 2019, detailing its assets alongside its liabilities and shareholders' equity. The events in 2020 reflect strategic financial movements, such as asset sales and debt retirement.
### Financial Transactions and Instructions for 2020 1. **Issuance of Common Stock**: An additional $20,000 in common stock was issued at par. 2. **Dividends Payment**: Dividends of $8,200 were declared and paid to stockholders. 3. **Net Income**: Net income for 2020 was $32,000 after allowing for depreciation of $11,000. 4. **Land Acquisition**: Land was purchased through the issuance of $35,000 in bonds. 5. **Year-End Financial Position**: - **Cash**: At December 31, 2020, cash was $37,000. - **Accounts Receivable**: $41,600. - **Accounts Payable**: Remained at $30,000. ### Instructions a. **Prepare a statement of cash flows for 2020.** b. **Prepare an unclassified balance sheet as it would appear at December 31, 2020.** c. **How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.** These entries outline essential financial activities and position changes over the fiscal year 2020. The instructions guide you to prepare critical financial documents and analyses to understand better and convey the company's financial situation.
Transcribed Image Text:### Financial Transactions and Instructions for 2020 1. **Issuance of Common Stock**: An additional $20,000 in common stock was issued at par. 2. **Dividends Payment**: Dividends of $8,200 were declared and paid to stockholders. 3. **Net Income**: Net income for 2020 was $32,000 after allowing for depreciation of $11,000. 4. **Land Acquisition**: Land was purchased through the issuance of $35,000 in bonds. 5. **Year-End Financial Position**: - **Cash**: At December 31, 2020, cash was $37,000. - **Accounts Receivable**: $41,600. - **Accounts Payable**: Remained at $30,000. ### Instructions a. **Prepare a statement of cash flows for 2020.** b. **Prepare an unclassified balance sheet as it would appear at December 31, 2020.** c. **How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.** These entries outline essential financial activities and position changes over the fiscal year 2020. The instructions guide you to prepare critical financial documents and analyses to understand better and convey the company's financial situation.
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