50.1K

Verified Solution

Link Copied!

Hoover Industries, Inc.
Income Statement
For the Year Ended December 31, 2014
Sales revenues			$953,000
Less: Cost of goods sold			377,000
Gross profit			$576,000
Less operating expenses:
Salaries and wages expense		$184,000
Insurance expense		12,500
Depreciation expense		44,100
Other operating expenses		82,000
	Total operating expenses		322,600
Operating income			$253,400
Plus other income and less other expenses:
Interest expense		$5,800
Gain on sale of PP and E		2,500
	Total other income and expenses		3,300
Income before income taxes			$250,100
Less: Income tax expense			75,030
Net income			$175,070

--------------------------------------------

Hoover Industries, Inc.
Comparative Balance Sheets
December 31, 2014 and 2013
Assets		2014	2013
Current assets:
Cash		$472,000	$290,000
Accounts receivable		78,000	129,000
Inventory		325,000	216,000
Prepaid insurance		7,500	5,500
Total current assets		$882,500	$640,500
Property, plant, and equipment		$620,000	$575,000
Less: Accumulated depreciation		(149,000)	(113,000)
Investments		93,000	75,000
Total assets		$1,446,500	$1,177,500
Liabilities
Current liabilities:
Accounts payable (inventory purchases)		$57,000	$33,000
Wages payable		16,400	17,700
Interest payable		1,600	800
Income taxes payable		66,030	12,500
Other accrued expenses payable		6,500	3,000
Total current liablities		$147,530	$67,000
Long-term liabilities		61,000	25,000
Total liabilities		$208,530	$92,000
Stockholders' equity
Common stock		$606,000	$606,000
Retained earnings		631,970	479,500
Total stockholders' equity		$1,237,970	$1,085,500
Total liabilities and equity		$1,446,500	$1,177,500

----------------------------------------

Additional information follows:

a.	Sold plant asset for $4,500. The original cost of this plant asset was $10,100 and it had $8,100 of accumulated depreciation associated with it.
b.	Paid $7,000 on the bonds payable; issued $43,000 of new bonds payable.
c.	Declared and paid cash dividends of $22,600.
d.	Purchased new investment for $18,000.
e.	Purchased new equipment for $55,100. ---------------------------------------

Hoover Industries, Inc.
	Statement of Cash Flows (Indirect Method)
	For the Year Ended December 31, 2014
	Operating Activities:
	Net income
	Adjustments to reconcile net income to cash basis
	Depreciation expense
	Gain on sale of plant asset
	Decrease in accounts receivable
	Increase in inventory
	Increase in prepaid insurance
	Increase in accounts payable
	Decrease in wages payable
	Increase in interest payable
	Increase in taxes payable
	Increase in other accrued operating expenses
	Net cash provided by (used for) operating activities

	Investing Activities:
	Purchase of new investments
	Proceeds on sale of plant asset
	Purchase of equipment
	Net cash provided by (used for) investing activities

	Financing Activities:
	Dividends paid
	Repayment of long-term debt
	Proceeds from bond issuance
	Net cash provided by (used for) financing activities

	Net increase (decrease) in cash
	Cash, beginning of the year
	Cash, end of the year

Answer & Explanation Solved by verified expert

See Answer