question archive P23-1 (SCF—Indirect Method) The following are Sullivan Corp
P23-1 (SCF—Indirect Method) The following are Sullivan Corp
Subject:AccountingPrice: Bought3
P23-1 (SCF—Indirect Method) The following are Sullivan Corp.'s comparative
balance sheet accounts at December 31, 2014 and 2013, with a column showing the increase (decrease) from 2013 to 2014.
COMPARATIVE BALANCE SHEETS Increase 2014 2013 (Decrease)Cash $ 815,000 $ 700,000 $115,000Accounts receivable 1,128,000 1,168,000 (40,000)Inventory 1,850,000 1,715,000 135,000Property, plant, and equipment 3,307,000 2,967,000 340,000Accumulated depreciation (1,165,000) (1,040,000) (125,000)Investment in Myers Co. 310,000 275,000 35,000Loan receivable 250,000 — 250,000 Total assets $6,495,000 $5,785,000 $710,000Accounts payable $1,015,000 $ 955,000 $ 60,000Income taxes payable 30,000 50,000 (20,000)Dividends payable 80,000 100,000 (20,000)Lease liability 400,000 — 400,000Common stock, $1 par 500,000 500,000 —Paid-in capital in excess of par—common stock 1,500,000 1,500,000 —Retained earnings 2,970,000 2,680,000 290,000 Total liabilities and stockholders' equity $6,495,000 $5,785,000 $710,000Additional information: 1. On December 31, 2013, Sullivan acquired 25% of Myers Co.'s common stock for $275,000. On that date, the carrying value of Myers's assets and liabilities, which approximated their fair values, was $1,100,000. Myers reported income of $140,000 for the year ended December 31, 2014. No dividend was paid on Myers's common stock during the year. 2. During 2014, Sullivan loaned $300,000 to TLC Co., an unrelated company. TLC made the first semi-annual principal repayment of $50,000, plus interest at 10%, on December 31, 2014. 3. On January 2, 2014, Sullivan sold equipment costing $60,000, with a carrying amount of $38,000, for $40,000 cash. 4. On December 31, 2014, Sullivan entered into a capital lease for an office building. The present value of the annual rental payments is $400,000, which equals the fair value of the building. Sullivan made the first rental payment of $60,000 when due on January 2, 2015. 5. Net income for 2014 was $370,000. 6. Sullivan declared and paid the following cash dividends for 2014 and 2013. 2014 2013Declared December 15, 2014 December 15, 2013Paid February 28, 2015 February 28, 2014Amount $80,000 $100,000InstructionsPrepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2014, using the indirect method.
