FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The following is Sullivan Corp.'s
comparative statement of financial position accounts at December 31, 2019 and
2018, with a column showing the increase (decrease) from 2018 to 2019.
COMPARATIVE STATEMENTS OF FINANCIAL POSITION
2019 2018 Increase (Decrease)
Property, plant and equipment $3,307,000 $2,967,000 $340,000
Accumulated depreciation (1,165,000) (1,040,000) (125,000)
Equity investment (Myers Co.) 310,000 275,000 35,000
Inventory 1,850,000 1,715,000 135,000
Accounts receivable 1,128,000 1,168,000 (40,000)
Debt investment 250,000 — 250,000
Cash 815,000 700,000 115,000
Total assets $6,495,000 $5,785,000 $710,000
Share capital—ordinary, $1 par $ 500,000 $ 500,000 —
Share premium—ordinary 1,500,000 1,500,000 —
Retained earnings 2,970,000 2,680,000 $290,000
Finance lease obligation 400,000 — 400,000
Accounts payable 1,015,000 955,000 60,000
Income taxes payable 30,000 50,000 (20,000)
Dividends payable 80,000 100,000 (20,000)
Total equity and liabilities $6,495,000 $5,785,000 $710,000
Additional information:
1. On December 31, 2017, Sullivan acquired 25% of Myers Co.'s ordinary
shares for $275,000. On that date, the carrying value of Myers' assets and
liabilities, which approximated their fair values, was $1,100,000. Myers
reported income of $140,000 for the year ended December 31, 2019. No
dividend was paid on Myers' ordinary shares during the year.
2. During 2019, Sullivan loaned $300,000 to TLC Co., an unrelated company.
TLC made the first semi-annual principal repayment of $50,000, plus
interest at 10%, on December 31, 2019.
3. On January 2, 2019, Sullivan sold equipment costing $60,000, with a
carrying amount of $38,000, for $40,000 cash.
4. On December 31, 2019, Sullivan entered into a finance lease for an office
building. The present value of the annual rental payments is $400,000,
which equals the fair value of the building. Sullivan made the first rental
payment of $60,000 when due on January 2, 2020.
5. Net income for 2019 was $370,000.
6. Sullivan declared and paid cash dividends for 2019 and 2018 as shown
below.
2019 2018
Declared December 15, 2019 December 15, 2018
Paid February 28, 2020 February 28, 2019
Amount $80,000 $100,000
Instructions
Prepare a statement of cash flows for Sullivan Corp. for the year ended December
31, 2019, using the indirect method.
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