Andrea Greene, president of ScanHouse, LLC, considers $22,000 to be a minimum cash balance for operating purposes. She is concerned about the low balance of $15,000 in cash. Considering the large net income generated during the year, and issuing additional bonds and selling higher cash balance at year-end. She has asked you to prepare a Statement of Cash Flows to help describe why the company had a large decline in cash this year some long-term investments, she was expecting The following additional information is available for the year 2019: a. The company sold long-term investments with an $50,000 during the year original cost of $30,000 for b. Equipment that had cost $90,000 and on which there was $40,000 in accumulated depreciation was sold during the year for $44,000. c. The company declared and paid a cash dividend during the year d. The stock (no par value) of a dissident stockholder was repurchased for cash and retired during the year. No new issues of stock were made. e. The company did not retire any bonds during the year Required: (using an excel spreadsheet) 1. Prepare a spreadsheet (similar to the spreadsheet worked on support a statement of cash flows for ScanHouse for the year ended December 31, 2019, based on the preceding information. 2. Prepare a complete statement of cash flows (operating, investing, and financing) for the year ended December 31, 2019. Use the direct method when completing the operating activities section of the statement 3. Prepare the cash flows from operating activities using the indirect method 4. Explain the major during class) to reasons for the decline in the company's cash balance Scan House, LLC Balance Sheet December 31, 2019 and 2018 Assets 2019 2018 Current Asse ts 15,000 $ Cash 33,000 200,000 Accounts Receivable 210,000 Inventory 250,000 196,000 5,000 Prepaid Insurance 3,000 Prepaid Rent 4,000 10,000 Total current assets 472,000 454,000 Long-term investments 90,000 120,000 Plant and Equi pment 860,000 750,000 Less: accumulated depreciation Net Plant and Equipment (210,000) 650,000 (190,000) 560,000 Total Assets $ 1,212,000 $ 1,134,000 Liabilities and Stockhol ders' Equity Current Liabilities Accounts Payable Sal ari es Payable 230,000 175,000 $ 7,000 13,000 Accrued liabilities 1,000 2,000 Income taxes payable 42,000 39,000 Total current liabilities 225,000 284,000 Bonds payable 100,000 200,000 Total liabiliti es 425,000 384,000 Stockholders' equity Common Stock 595,000 600,000 Retained Earnings Total Stockholders' Equity 192,000 150,000 787,000 750,000 Total Liabilities and Stockhol de rs' Equity $ 1,212,000 $ 1,134,000 Scan House, LLC Income Statement For the Year Ended December 31, 2019 800,000 Sales Cost of goods sold Gross margin Selling and Admini strative expenses 500,000 300,000 Salari es expense 100,000 Insurance ex pe nse 25,000 Depreciation expense 60,000 Utilities expense 9,000 Rent expense 20,000 214,000 86,000 Net operating income Other Income (expenses) Gain on sale of investme nts 20,000 Loss on sale of equipment (6,000) 14,000 Income before taxes 100,000 Income taxes 30,000 Net Income 70,000
