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T-Account, Direct method and indirect method statement of cash flow.

1 Washington Irving, Inc. 2 Comparative Balance Sheets 3 As of January 31, 2018 4 2017 2016 5 Assets 6 Current Assets: 7 Cash and cash equivalents S 754,535.50 $ 469,037.50 8 Accounts receivable (Net) $ 257,070.00 $ 233,450.00 9 Inventory $ 1,797,510.00 $ 1,488,600.00 10 Income taxes receivable $ 3,477.00 $ 11 Notes receivable $ 311,700.00 $ 339,200.00 12 Investments $ 995,090.00 $ 1,068,750.00 13 Total current assets $ 4,119,382.50 $ 3,599,037.50 14 Non-current Assets 15 Property, plant, and equipment (Net) $ 12,193,000.00 $ 12,700,000.00 16 Right-of-use asset $ 205,420.97 $ 17 Investments $ 3,709,800.00 $ 3,631,150.00 18 Goodwill and intangible assets $ 2,300,000.00 $ 2,360,000.00 19 Deferred income taxes $ 26,085.50 $ 20 Total non-current assets $ 18,434,306.47 $ 18,691,150.00 21 Total Assets $ 22,553,688.97 $ 22,290,187.50 22 Liabilities and Equity 23 Current Liabilities: 24 Accounts payable 242,100.00 $ 230,100.00 25 Notes payable 258,300.00 $ 280,900.00 26 Income taxes payable $ $ 3,477.00 27 Current lease payable $ 72,500.00 $ 28 Current maturity of long-term debt 256,900.00 $ 29 Total current liabilities 829,800.00 $ 514,477.00 30 Non-current Liabilities 31 Long-term debt (net) $ 4,574,310.00 $ 4,861,100.00 32 Pensions $ 6,302,590.00 $ 6,151,130.00 33 Leases Payable $ 132,920.97 $ 34 Deferred income taxes $ 51,860.00 $ 47,270.00 35 Liability - RSU Plan $ 50,000.00 $ 36 Liability - Potential Additional Tax $ 21,000.00 $ 37 Total noncurrent liabilities $ 11,132,680.97 $ 11,059,500.00 38 Total Liabilities $ 11,962,480.97 $ 11,573,977.00 39 Common Stock, $0.01 par value $ 14,972.50 $ 14,897.50 40 Additional paid-in capital $ 10,906,590.00 $ 10,829,790.00 41 Retained earnings $ (158,024.50) $ 3,603.00 42 Accumulated other comprehensive income (loss) $ (172,330.00) $ (132,080.00) 43 Total Equity $ 10,591,208.00 $10,716,210.50 44 Total Liabilities and Equity $ 22,553,688.97 $ 22,290,187.50 UUUUUU 1 w N 4 5 Balance at January 31, 2016 $ 6 Net income $ 7 Other comprehensive income (loss) $ 8 Issuance of common stock $ 9 Purchase of common stock $ 10 Stock-based compensation 11 Cash dividends declared on common sto $ 12 Balance at January 31, 2017 $ 13 Net income $ 14 Other comprehensive income (loss) 15 Issuance of common stock $ 16 Purchase of common stock $ 17 Stock-based compensation 18 Cash dividends declared on common sto $ 19 Balance at January 31, 2018 $ Washington Irving, Inc. Statements of Equity For the Year Ending January 31, 2017 Accumulated Other Additional Paid-in Comprehensive Common Stock Capital Retained Earnings Income 15,000.00 $ 10,860,000.00 $ (43,267.00) $ (28,680.00) $ $ 48,620.00 $ $ $ (103,400.00) 72.50 $ 45,240.00 $ $ (175.00) $ (100,450.00) $ $ 25,000.00 $ $ $ $ (1,750.00) $ 14,897.50 $ 10,829,790.00 $ 3,603.00 $ (132,080.00) $ $ (159,377.50) $ $ $ $ (40,250.00) 100.00 $ 62,400.00 $ $ (25.00) $ (10,600.00) $ $ $ 25,000.00 $ $ $ $ (2,250.00) $ 14,972.50 $ 10,906,590.00 $ (158,024.50) $ (172,330.00) 2 3 4 1 Washington Irving, Inc. Comparative Statements of Comprehensive Income For the Year Ending January 31, 2018 2017 2016 5 Gross sales $ 3,870,250.00 $3,250,000.00 6 Less: Sales returns (1) $ (275,000.00) $ (150,000.00) 7 Net sales $ 3,595,250.00 $ 3,100,000.00 8 Cost of goods sold $(2,260,890.00) $ (1,850,000.00) 9 Gross profit $ 1,334,360.00 $ 1,250,000.00 10 Operating expenses: 11 Selling expenses $ 526,800.00 $ 425,000.00 12 General and administrative expenses $ 382,500.00 $ 279,800.00 13 Research and development expenses $ 75,000.00 $ 125,000.00 14 Goodwill impairment $ 60,000.00 $ 200,000.00 15 Depreciation expense $ 425,000.00 $ 365,000.00 16 Amortization expense (leases) $ 60,872.40 $ 17 Bad debts expense $ 24,890.00 $ 18 Total operating expenses $ 1,555,062.40 $ 1,394,800.00 19 Operating income $ (220,702.40) $ (144,800.00) 20 Other income (expense): 21 Interest and dividend revenue $ 159,800.00 $ 126,500.00 22 Gain (loss) on sale of TS investments $ (1,250.00) $ 23 Gain (loss) on sale of property $ (12,500.00) $ 165,000.00 24 Unrealized holding gain (loss) on TS investments $ 12,590.00 $ 18,750.00 25 Interest expense $ (101,287.60) $ (90,650.00) 26 Total other income (expense), net $ 57,352.40 $ 219,600.00 27 Income before income taxes $ (163,350.00) $ 74,800.00 28 Income tax expense (benefit) $ (3,972.50) $ 26,180.00 29 Net income $ (159,377.50) $ 48,620.00 30 Other Comprehensive Income 31 Defined benefit plans, net $ (118,900.00) $ (135,900.00) 32 Unrealized holding gain (loss) on AFS investments $ 78,650.00 $ 32,500.00 33 Comprehensive income (loss) $ (199,627.50) $ (54,780.00) 2 BV: Nontax Rev Cash Sales $ 40,000.00 Proceeds: $ 85,000.00 $ 32,000.00 $3,265,900.00 1 Note: The loss on sale of TS investments is for securities originally purchased for $40,000 and sold for $85,000 3 $32,000 of interest revenue is nontaxable 4 Cash sales were $3,265,900, the rest were sales on account 5 The deferred tax liability is due to differences in tax to book depreciation methods 6 Included in accounts payable are all relevant current liabilities payable, excepting income taxes payable 7 No new long-term debt was issued during the year. 8 G&A includes pension expense of $85,410 9 Contributions to pension plan assets of $52,850 were made this year 10 G&A expenses include $50,000 in RSUs payable in either equity or cash and $25,000 payable only in equity 11 $85,260 of the returns were for sales on account 12 Leases have a four year lease term with one payment due immediately and then due at Feb 1 of each year thereafter 13 Assume that the goodwill on the balance sheet is NEVER tax deductible and ignore all other temporary differences 14 The loss on the sale of property is for PP&E which was sold for $289,500 Pension Exp. Contributions Liab. AR Returns $ $ $ 85,410.00 52,850.00 50,000.00 Equity 85,260.00 $ 25,000.00 $ Nontax Impair $ 60,000.00 PPE Proceeds $ 289,500.00