Question
Hartman, Inc. has prepared the following comparative balance sheets for 2019 and 2020: 2020 2019 Cash $138,500 $168,500 A/R 111,100 119,400 Less Allowance for bad
Hartman, Inc. has prepared the following comparative balance sheets for 2019 and 2020:
2020 2019
Cash $138,500 $168,500
A/R 111,100 119,400
Less Allowance for bad debt (2,100) (2,400)
Inventory 374,000 385,000
Prepaid rent 27,000 18,000
Plant assets 1,267,000 1,150,000
Less Acc Deprec (415,000) (375,000)
Equity method investment 57,500 0
Patent 153,000 174,000
Total $1,711,000 $1,637,500
Accounts payable $163,500 $168,000
Wages payable 75,000 42,000
Long-term note payable 345,000 352,000
Deferred tax liability 90,000 98,000
Bonds payable (with premium of $7,000 & $7,500) 307,000 307,500
Common Stock ($1 par) 300,000 300,000
Additional paid-in capital common stock 200,000 200,000
Retained earnings 230,500 170,000
Total $1,711,000 $1,637,500
The income statement for 2020 is as follows:
Sales revenue $1,980,000
Cost of goods sold (1,089,000)
Wages expense (472,000)
Rent expense (108,000)
Depreciation expense (55,000)
Patent amortization expense (21,000)
Bond interest expense (24,000)
Gain on sale of equipment 9,500
Equity method investment income 12,000
Income tax expense (87,000)
Net income $145,500
Additional information:
- Equipment with a cost of $32,000 and accumulated depreciation of $15,000 was sold during the year.
- Hartman made a 30% investment in Action, Co. for $50,000, on Jan 2, 2020. Action, Co. had total net income of $40,000 and paid total dividends of $15,000 in 2020.
- Dividends were declared and paid during 2020 (you need to calculate the amount)
(a) From the information above, prepare a statement of cash flows (indirect method) for Hartman, Inc. for the year ended December 31, 2020.
(b) From the information above, prepare a schedule of cash provided by operating activities using the direct method. (Only the operating section is needed for this one)
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