Problem 18 James Strat, the owner of the Molehill, a small lodging operation, has asked for your help in answering a few selected questions. He is able to present you with the condensed balance sheets and some additional information, as follows: 80 Chapter 2 The Molehill Condensed Balance Sheets December 31, 20X1 and 20X2 20X1 20x2 Cash $ 10,000 $ 8,000 Accounts receivable 26,500 22,500 Investments 10,000 20,000 Equipment 200,000 320,000 Accumulated depreciation (20,000) (59,000) Total Assets $ 226,500 $ 311,500 $ 18,000 5,000 $ 21,000 22,000 8,000 5,000 Current liabilities: Accounts payable Mortgage payable (current) Dividends payable Noncurrent liabilities: Mortgage payable Common stock Retained earnings Total Liabilities and Owner's Equity 75,000 50,000 73,500 $ 226,500 110,000 70,000 80,500 $ 311,500 Additional information regarding activities for 20X2: a. Equipment costing $20,000 and fully depreciated (to $0) was sold for $5,000. b. Long-term investments costing $10,000 were sold for $12,000. c. Common stock was sold and long-term debt was borrowed during 20X2. There were no noncash financing or investing activities during 20X2. d. Income before gain on the sale of equipment and investments for 20X2 totaled $15,000. The firm's average and marginal tax rates are 15 percent and 20 percent, respectively. e. Assume all current liabilities are paid on a timely basis. f. Assume retained earnings is affected only by net earnings and dividends declared. Required: Answer the following questions. 1. What was the change in cash during 20X2? 2. What amount of investments were purchased during 20X2? 3. What was the total cost of equipment purchases during 20X2? 4. What was the net book value of fixed assets at the beginning of 20X2? 5. What was the amount of the mortgage payment, excluding interest expense, during 20X2? 6. What were the net earnings for 20X2? 7. What were the amount of dividends declared during 20X2? 8. What were the amount of dividends paid during 20X2