The following are Farrell Corporation's balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Balance Sheets December 31 2019 2018 Increase(Decrease) Assets Cash $225,000 $180,000 $45,000 Accounts receivable, net 295,000 305,000 (10,000) Inventories 549,000 431,000 118,000 Investment in Hall Inc. at equity 73,000 60,000 13,000 Land 350,000 200,000 150,000 Plant and equipment 624,000 606,000 18,000 Less: Accumulated depreciation (139,000) (107,000) (32,000) Patent 16,000 20,000 (4,000) Total Assets $1,993,000 $1,695,000 $298,000 Liabilities and Shareholders' Equity Accounts payable and accrued expenses $604,000 $563,000 $41,000 Note payable, long-term 150,000 — 150,000 Bonds payable 160,000 210,000 (50,000) Deferred taxes payable 41,000 30,000 11,000 Common stock, $10 par 410,000 400,000 10,000 Additional paid-in capital 196,000 175,000 21,000 Retained earnings 432,000 334,000 98,000 Treasury stock, at cost — (17,000) 17,000 Total Liabilities and Shareholders' Equity $1,993,000 $1,695,000 $298,000 Statement of Income and Retained EarningsFor the Year Ended December 31, 2019 Net sales $1,950,000 Operating expenses: Cost of sales $1,150,000 Selling and administrative expenses 505,000 Depreciation 53,000 $1,708,000 Operating income $242,000 Other (income) expense: Interest expense $15,000 Equity in net income of Hall Inc. (13,000) Loss on sale of equipment 5,000 Amortization of patent 4,000 $11,000 Income before income taxes $231,000 Income taxes: Current $ 79,000 Deferred 11,000 Provision for income taxes $90,000 Net income $ 141,000 Retained earnings, January 1, 2019 334,000 $475,000 Cash dividends, paid August 13, 2019 43,000 Retained earnings, December 31, 2019 $432,000 Additional information: On January 2, 2019, Farrell sold equipment costing $45,000, with a book value of $24,000, for $19,000 cash. On April 2, 2019, Farrell issued 1,000 shares of common stock for $23,000 cash. On May 14, 2019, Farrell sold all of its treasury stock for $25,000 cash. On June 1, 2019, Farrell paid $50,000 to retire bonds with a face value (and book value) of $50,000. On July 2, 2019, Farrell purchased equipment for $63,000 cash. On December 31, 2019, land with a fair market value of $150,000 was purchased through the issuance of a long-term note in the amount of $150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information.

The following are Farrell Corporation's balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Balance Sheets December 31 2019 2018 Increase(Decrease) Assets Cash $225,000 $180,000 $45,000 Accounts receivable, net 295,000 305,000 (10,000) Inventories 549,000 431,000 118,000 Investment in Hall Inc. at equity 73,000 60,000 13,000 Land 350,000 200,000 150,000 Plant and equipment 624,000 606,000 18,000 Less: Accumulated depreciation (139,000) (107,000) (32,000) Patent 16,000 20,000 (4,000) Total Assets $1,993,000 $1,695,000 $298,000 Liabilities and Shareholders' Equity Accounts payable and accrued expenses $604,000 $563,000 $41,000 Note payable, long-term 150,000 — 150,000 Bonds payable 160,000 210,000 (50,000) Deferred taxes payable 41,000 30,000 11,000 Common stock, $10 par 410,000 400,000 10,000 Additional paid-in capital 196,000 175,000 21,000 Retained earnings 432,000 334,000 98,000 Treasury stock, at cost — (17,000) 17,000 Total Liabilities and Shareholders' Equity $1,993,000 $1,695,000 $298,000 Statement of Income and Retained EarningsFor the Year Ended December 31, 2019 Net sales $1,950,000 Operating expenses: Cost of sales $1,150,000 Selling and administrative expenses 505,000 Depreciation 53,000 $1,708,000 Operating income $242,000 Other (income) expense: Interest expense $15,000 Equity in net income of Hall Inc. (13,000) Loss on sale of equipment 5,000 Amortization of patent 4,000 $11,000 Income before income taxes $231,000 Income taxes: Current $ 79,000 Deferred 11,000 Provision for income taxes $90,000 Net income $ 141,000 Retained earnings, January 1, 2019 334,000 $475,000 Cash dividends, paid August 13, 2019 43,000 Retained earnings, December 31, 2019 $432,000 Additional information: On January 2, 2019, Farrell sold equipment costing $45,000, with a book value of $24,000, for $19,000 cash. On April 2, 2019, Farrell issued 1,000 shares of common stock for $23,000 cash. On May 14, 2019, Farrell sold all of its treasury stock for $25,000 cash. On June 1, 2019, Farrell paid $50,000 to retire bonds with a face value (and book value) of $50,000. On July 2, 2019, Farrell purchased equipment for $63,000 cash. On December 31, 2019, land with a fair market value of $150,000 was purchased through the issuance of a long-term note in the amount of $150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

The following are Farrell Corporation's balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019:

	Balance Sheets
	December 31
	2019	2018	Increase (Decrease)
Assets
Cash	$225,000	$180,000	$45,000
Accounts receivable, net	295,000	305,000	(10,000)
Inventories	549,000	431,000	118,000
Investment in Hall Inc. at equity	73,000	60,000	13,000
Land	350,000	200,000	150,000
Plant and equipment	624,000	606,000	18,000
Less: Accumulated depreciation	(139,000)	(107,000)	(32,000)
Patent	16,000	20,000	(4,000)
Total Assets	$1,993,000	$1,695,000	$298,000
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses	$604,000	$563,000	$41,000
Note payable, long-term	150,000	—	150,000
Bonds payable	160,000	210,000	(50,000)
Deferred taxes payable	41,000	30,000	11,000
Common stock, $10 par	410,000	400,000	10,000
Additional paid-in capital	196,000	175,000	21,000
Retained earnings	432,000	334,000	98,000
Treasury stock, at cost	—	(17,000)	17,000
Total Liabilities and Shareholders' Equity	$1,993,000	$1,695,000	$298,000

Statement of Income and Retained Earnings For the Year Ended December 31, 2019
Net sales	$1,950,000
Operating expenses:
Cost of sales	$1,150,000
Selling and administrative expenses	505,000
Depreciation	53,000
	$1,708,000
Operating income	$242,000
Other (income) expense:
Interest expense	$15,000
Equity in net income of Hall Inc.	(13,000)
Loss on sale of equipment	5,000
Amortization of patent	4,000
	$11,000
Income before income taxes	$231,000
Income taxes:
Current	$ 79,000
Deferred	11,000
Provision for income taxes	$90,000
Net income	$ 141,000
Retained earnings, January 1, 2019	334,000
	$475,000
Cash dividends, paid August 13, 2019	43,000
Retained earnings, December 31, 2019	$432,000

Additional information:

On January 2, 2019, Farrell sold equipment costing $45,000, with a book value of $24,000, for $19,000 cash.
On April 2, 2019, Farrell issued 1,000 shares of common stock for $23,000 cash.
On May 14, 2019, Farrell sold all of its treasury stock for $25,000 cash.
On June 1, 2019, Farrell paid $50,000 to retire bonds with a face value (and book value) of $50,000.
On July 2, 2019, Farrell purchased equipment for $63,000 cash.
On December 31, 2019, land with a fair market value of $150,000 was purchased through the issuance of a long-term note in the amount of $150,000. The note bears interest at the rate of 15% and is due on December 31, 2021.
Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting.

Required:

Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.