The following are Sullivan Corp.’s comparative balance sheet accounts at December 31, 2014 and 2013, with a column showing the increase (decrease) fro
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.
\r\nCOMPARATIVE BALANCE SHEETS
\r\nIncrease
\r\n2014 2013 (Decrease)
\r\nCash $ 815,000 $ 700,000 $115,000
\r\nAccounts receivable 1,128,000 1,168,000 (40,000)
\r\nInventory 1,850,000 1,715,000 135,000
\r\nProperty, plant, and equipment 3,307,000 2,967,000 340,000
\r\nAccumulated depreciation (1,165,000) (1,040,000) (125,000)
\r\nInvestment in Myers Co. 310,000 275,000 35,000
\r\nLoan receivable 250,000 — 250,000
\r\nTotal assets $6,495,000 $5,785,000 $710,000
\r\nAccounts payable $1,015,000 $ 955,000 $ 60,000
\r\nIncome taxes payable 30,000 50,000 (20,000)
\r\nDividends payable 80,000 100,000 (20,000)
\r\nLease liability 400,000 — 400,000
\r\nCommon stock, $1 par 500,000 500,000 —
\r\nPaid-in capital in excess of par—common stock 1,500,000 1,500,000 —
\r\nRetained earnings 2,970,000 2,680,000 290,000
\r\nTotal liabilities and stockholders’ equity $6,495,000 $5,785,000 $710,000
\r\nAdditional information:
\r\n1. 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.
\r\n2. During 2014, Sullivan loaned $300,000 to TLC Co., an unrelated company. TLC made the first semiannual principal repayment of $50,000, plus interest at 10%, on December 31, 2014.
\r\n3. On January 2, 2014, Sullivan sold equipment costing $60,000, with a carrying amount of $38,000, for $40,000 cash.
\r\n4. 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.
\r\n5. Net income for 2014 was $370,000.
\r\n6. Sullivan declared and paid the following cash dividends for 2014 and 2013.
\r\n2014 2013
\r\nDeclared December 15, 2014 December 15, 2013
\r\nPaid February 28, 2015 February 28, 2014
\r\nAmount $80,000 $100,000
\r\nInstructions
\r\nPrepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2014, using the indirect method.