Consider the following financial statements and information for the Hurdy-Gurdy Company. Balance Sheets, December 31 20x1 20x2 Cash 14400 $91,320 Short-term investments. 17,600 7,300 Accounts receivable, net.. 24,620 63,142 Prepaid general expenses. 10,000 12,000 Inventory...... 29.590 88,004 Total current assets. 96.210 261,766 Land. 41,300 28,700 Building 250.000 250,000 Equipment.. 42,000 Accumulated depreciation _115,000) (17,750) Investment in 30%-owned subsidiary 60,920 82,480 Other assets. 24,300 24,300 Total assets $457.730 $671.496 Accounts payable.. Income taxes payable Total current liabilities Notes payable Bonds payable Discount on bonds payable. Deferred income taxes. Preferred stock Common stock Retained earnings Total liabilities and stockholders' equity 20x1 $ 21.220 80.000 101.220 31,000 100,000 (2,400) 25,610 30,000 80,000 92,300 $457.730 20x2 $ 16,000 65,037 81,037 201,000 100,000 (2,000) 30,846 -0- 110,000 150,613 $671.496 Income Statement Data for the Year Ended December 31, 20x2 Sales $352,071 Gain on sale of investments.. 3,400 Equity in earnings of 30%-owned subsidiary. 21.560 Total revenues and gains. 377.031 Cost of goods sold.. 130407 Bad debt expense. 8,000 General and administrative expenses 22,010 Depreciation 2,750 Interest expense 15,865 Income taxes. 85,086 Total expenses. 264. 118 Income from continuing operations_ 112.913 Discontinued operation of recreational land area (net of tax). 20,400 Net income. -$133,313 Your discussion with the company's controller and a review of the financial records has revealed the following information for the year ended 12/31/x2: No short-term investments were purchased during the year. Accounts payable is exclusively for merchandise purchases. The company's preferred stock is convertible into common stock at a rate of one share of preferred for two shares of common. The preferred stock and common stock have par values of $2 and $1, respectively. Land used as a for-profit recreational area was sold for cash on March 22, 20x2 (treated as a capital gain for tax purposes). The company purchased equipment for cash. Bonds payable were issued by the company at par for cash. No bonds were retired during the year. The company's tax rate is 40% for regular income and 20% for capital gains. a. How much cash was paid for inventory? b. How much cash was collected from customers? How much cash was paid for general and administrative expenses? d. How much cash was paid for taxes? How much cash was paid for interest? f. How much cash was received for the sale of investments? How much cash was received for the condemnation of land? h. How much cash was received for the issuance of common stock? i. How much cash was paid for the increased investment in subsidiary? j How much cash was paid for dividends? c. e
