Balance Sheet 2018

2018 2017 Change

Assets

Cash $47,500 $24,300 $23,200

Accounts receivable $21,500 $26,000 ($4,500)
Prepaid insurance $2,500 $1,800 $700
Inventory $48,000 $45,500 $2,500
Land $20,000 $10,000 $10,000
Plant Assets $230,000 $190,000 $40,000
Accumulated Depreciation ($85,500) ($71,100) ($14,400)

Total Assets $284,000 $226,500 $57,500

Liabilties

Accounts Payable $17,200 $19,000 ($1,800)

Salaries Payable $1,900 $1,500 $400
Notes Payable $85,000 $75,000 $10,000

Total Liabilities $104,100 $95,500 $8,600

Equity

Common stock $115,000 $70,000 $45,000

Retained Earnings $64,900 $61,000 $3,900

Total equity $179,900 $131,000 $48,900

Total liabilities and equity $284,000 $226,500 $57,500

Additional Information:

1. Propensity Company sold land with an original cost of $10,000, for $14,800 cash.
2. A new parcel of land was purchased for $20,000, in exchange for a note payable.
3. Plant assets were purchased for $40,000 cash.
4. Propensity declared and paid a $440 cash dividend to shareholders.
5. Propensity issued common stock in exchange for $45,000 cash.

Cash flow from operating activities

Net income $4,340

Depreciation $14,400
Gain on Sale of Plant assets ($4,800)
Accounts receivable decrease $4,500
Prepaid insurance increase ($700)
Inventory increase ($2,500)
Accounts payable decrease ($1,800)
Salaries Payable increase $400

Net cash flow: Operating activities $13,840

Cash flow from investing activities

Proceeds from sale of land $14,800 see additional information box 1.

Cost of New plant assets ($40,000) see additional information box 3.

Net cash flow: Investing activities ($25,200)

Cash flow from financing activities

Payment of notes payable ($10,000)

Issuance of common stock $45,000
Payment of dividends ($440)

Net cash flow: Financing activities $34,560

Total cash flow increase/decrease $23,200 Cash balance Dec 31 2018 -

Cash balance Dec 31. 2017 $24,300

Cash balance Dec 31 2018 $47,500

Land acquired in exchange for Note payab $20,000 see additional information box 2.
 Income Statement 2018

Sales Revenue $238,000

COGS $153,000
Gross Profit $85,000

Operating expenses

Depreciation expense $14,400

Insurance expense $12,000
Salaries expense $42,600
Other operating expenses $11,100

Total operating expenses $80,100

Operating income $4,900

Other revenue and expenses

Gain on sale of land $4,800

Interest expense ($3,500)

Total other revenue and expenses $1,300

Income before income tax $6,200

Income tax expense $1,860

Net income $4,340

1. Net income
2. Add back depreciation
3. Remove the effect of gains/loss from long-term assets
4. Changes in current assets and liabilities
5. Cash flow from investing activities
6. Cash Flows from Financing Activities
nal information box 1.
nal information box 3.

Cash balance Dec 31 2018 - Cash balance Dec 31 2017

nal information box 2.

 Balance Sheet 2018
2018 2017 Change
Assets

Cash $66,700 $83,250 ($16,550)

Accounts receivable $55,400 $54,220 $1,180
Prepaid insurance $2,400 $3,600 ($1,200)
Investments $95,000 $75,000 $20,000
Plant Assets $356,000 $290,000 $66,000
Accumulated Depreciation ($65,700) ($36,700) ($29,000)

Total Assets $509,800 $469,370 $40,430

Liabilties

Accounts Payable $48,100 $47,300 $800

Notes Payable $160,000 $185,000 ($25,000)

Total Liabilities $208,100 $232,300 ($24,200)

Equity

Common stock $130,000 $100,000 $30,000

Retained Earnings $171,700 $137,070 $34,630

Total equity $301,700 $237,070 $64,630

Total liabilities and equity $509,800 $469,370 $40,430

Additional Information

The following additional information is provided:

1. Investments that originally cost $30,000 were sold for $47,500 cash.
2. Investments were purchased for $50,000 cash.
3. Plant assets were purchased for $66,000 cash.
4. Cash dividends were declared and paid to shareholders in the amount of $8,000.

Cash flow from operating activities

Net cash flow: Operating activities

Cash flow from investing activities

Net cash flow: Investing activities

Cash flow from financing activities

Net cash flow: Financing activities

Total cash flow increase/decrease

Cash balance Dec 31. 2017

Cash balance Dec 31 2018

 Income Statement 2018

Sales Revenue $433,000

COGS $289,000
Gross Profit $144,000

Operating expenses

Depreciation expense $29,000

Insurance expense $14,400
Other operating expenses $57,200

Total operating expenses $100,600

Operating income $43,400

Other revenue and expenses

Gain on sale of land $17,500

Total other revenue and expenses $17,500

Income before income tax $60,900

Income tax expense $18,270

Net income $42,630

1. Net income
2. Add back depreciation
3. Remove the effect of gains/loss from long-term assets
4. Changes in current assets and liabilities
5. Cash flow from investing activities
6. Cash Flows from Financing Activities
 Balance Sheet 2018
2018 2017 Change
Assets

Cash $66,700 $83,250 ($16,550)

Accounts receivable $55,400 $54,220 $1,180
Prepaid insurance $2,400 $3,600 ($1,200)
Investments $95,000 $75,000 $20,000
Plant Assets $356,000 $290,000 $66,000
Accumulated Depreciation ($65,700) ($36,700) ($29,000)

Total Assets $509,800 $469,370 $40,430

Liabilties

Accounts Payable $48,100 $47,300 $800

Notes Payable $160,000 $185,000 ($25,000)

Total Liabilities $208,100 $232,300 ($24,200)

Equity

Common stock $130,000 $100,000 $30,000

Retained Earnings $171,700 $137,070 $34,630

Total equity $301,700 $237,070 $64,630

Total liabilities and equity $509,800 $469,370 $40,430

Additional Information

The following additional information is provided:

1. Investments that originally cost $30,000 were sold for $47,500 cash.
2. Investments were purchased for $50,000 cash.
3. Plant assets were purchased for $66,000 cash.
4. Cash dividends were declared and paid to shareholders in the amount of $8,000.

Cash flow from operating activities

Net income $42,630

Depreciation $29,000
Gain on Sale of Plant assets ($17,500)
Accounts receivable increase ($1,180)
Prepaid insurance decrease $1,200
Accounts payable increase $800
Salaries Payable increase

Net cash flow: Operating activities $54,950

Cash flow from investing activities

Proceeds from investment sale $47,500

Cost of investment purchased ($50,000)
Cost of New plant assets ($66,000)

Net cash flow: Investing activities ($68,500)

Cash flow from financing activities

Payment of notes payable ($25,000)

Issuance of common stock $30,000
Payment of dividends ($8,000)

Net cash flow: Financing activities ($3,000)

Total cash flow increase/decrease ($16,550)

Cash balance Dec 31. 2017 $83,250

Cash balance Dec 31 2018 $66,700

 Income Statement 2018

Sales Revenue $433,000

COGS $289,000
Gross Profit $144,000

Operating expenses

Depreciation expense $29,000

Insurance expense $14,400
Other operating expenses $57,200

Total operating expenses $100,600

Operating income $43,400

Other revenue and expenses

Gain on sale of land $17,500

Total other revenue and expenses $17,500

Income before income tax $60,900

Income tax expense $18,270

Net income $42,630

1. Net income
2. Add back depreciation
3. Remove the effect of gains/loss from long-term assets
4. Changes in current assets and liabilities
5. Cash flow from investing activities
6. Cash Flows from Financing Activities