Problem 9-2A (Part Level Submission)
At December 31, 2014, Navaro Corporation reported the followingplant assets.
Land $ 5,196,000
Buildings $30,050,000
Less: Accumulated depreciationâbuildings 20,654,100
9,395,900
Equipment 69,280,000
Less: Accumulated depreciationâequipment 8,660,000
60,620,000
Total plant assets $75,211,900
During 2015, the following selected cash transactions occurred.
Apr. 1 Purchased land for $3,810,400. May 1 Sold equipment that cost $1,039,200 when purchased on January1, 2008. The equipment was sold for $294,440. June 1 Sold land for $2,771,200. The land cost $1,732,000. July 1 Purchased equipment for $1,905,200. Dec. 31 Retired equipment that cost $1,212,400 when purchased onDecember 31, 2005. No salvage value wasreceived.
Prepare the plant assets section of Navaroâs balance sheet atDecember 31, 2015. (Hint: You may wish to set up Taccounts, post beginning balances, and then post 2015transactions.) (List Plant Assets in order of Land,Building and Equipment.)
Problem 9-2A (Part Level Submission)
At December 31, 2014, Navaro Corporation reported the followingplant assets.
| Land | $ 5,196,000 | |||
| Buildings | $30,050,000 | |||
| Less: Accumulated depreciationâbuildings | 20,654,100 | 9,395,900 | ||
| Equipment | 69,280,000 | |||
| Less: Accumulated depreciationâequipment | 8,660,000 | 60,620,000 | ||
| Total plant assets | $75,211,900 |
During 2015, the following selected cash transactions occurred.
| Apr. | 1 | Purchased land for $3,810,400. | |
| May | 1 | Sold equipment that cost $1,039,200 when purchased on January1, 2008. The equipment was sold for $294,440. | |
| June | 1 | Sold land for $2,771,200. The land cost $1,732,000. | |
| July | 1 | Purchased equipment for $1,905,200. | |
| Dec. | 31 | Retired equipment that cost $1,212,400 when purchased onDecember 31, 2005. No salvage value wasreceived. |
Prepare the plant assets section of Navaroâs balance sheet atDecember 31, 2015. (Hint: You may wish to set up Taccounts, post beginning balances, and then post 2015transactions.) (List Plant Assets in order of Land,Building and Equipment.)
Related questions
1. Waterways sold a piece of company equipment for $24,000. The equipment had been used for ten years. It had cost $80,000 when purchases and had a 10-years life and a $6,000 salvage value. Straight-line depreciation was used.
2. Waterways purchased new equipment costing $209,200.
3. The division paid $50,000 in dividends.
| Waterways Corporation - Installation Division | |||
| Income Statement | |||
| For the year ending December 31 | |||
| Sales | $5,536,077 | ||
| Less: Cost of goods sold | 3,132,777 | ||
| Gross Profit | 2,403,300 | ||
| Operating expenses: | |||
| Advertising | $50,000 | ||
| Insurance | 400,000 | ||
| Salaries and wages | 584,640 | ||
| Depreciation | 71,319 | ||
| Other operating expenses | 21,200 | ||
| Total operating expenses | 1,127,159 | ||
| Income from operations | 1,276,141 | ||
| Other income | |||
| Gain on sale of equip | 18,000 | ||
| Other expenses | |||
| Interest expense | (12,187) | ||
| Net other income and expenses | 5,813 | ||
| Income before income tax | 1,281,954 | ||
| Income tax expenses | 384,586 | ||
| Net income | $897,368 | ||
| Waterways Corporation - Installation Division | ||||
| Balance Sheet | ||||
| December 31 | ||||
| Assets | This Year | Last Year | ||
| Current assets | ||||
| Cash | $786,797 | $746,681 | ||
| Accounts receivable | 680,750 | 542,685 | ||
| Work in process | 702,159 | 0 | ||
| Inventory | 16,766 | 7,500 | ||
| Prepaid expenses | 76,550 | 42,590 | ||
| Total current assets | 2,263,022 | 1,339,456 | ||
| Property, plant, and equipment | ||||
| Furnishings | 40,416 | 40,416 | ||
| Equipment | 929,400 | 800,200 | ||
| Buildings | 450,000 | 450,000 | ||
| Land | 300,000 | 300,000 | ||
| Accumulated depreciation | (482,523) | (485,204) | ||
| Total property, plant, and equipment | 1,237,293 | 1,105,412 | ||
| Total Assets | $3,500,315 | $2,444,868 | ||
| Liabilities and Stockholders' Equity | ||||
| Current liabilities | ||||
| Accounts payable | $157,095 | $128,360 | ||
| Income taxes payable | 101,344 | 79,989 | ||
| Wages payable | 4,517 | 1,984 | ||
| Interest payable | 1,187 | 0 | ||
| Other current liabilities | 14,515 | 15,246 | ||
| Revolving bank loan payable | 15,000 | 0 | ||
| Total current liabilities | 293,658 | 225,579 | ||
| Long-term liabilities | ||||
| Notes payable | 140,000 | 0 | ||
| Total liabilities | 433,658 | 225,579 | ||
| Stockholders' equity | ||||
| Common stock | 1,250,000 | 1,250,000 | ||
| Retained earnings | 1,816,657 | 969,289 | ||
| Total stockholders' equity | 3,066,657 | 2,219,289 | ||
| Total liabilities and stockholders' equity | $3,500,315 | $2,444,868 | ||
Instructions:
a. Prepare a statement of cash flow using the indirect method for this year.
b. Determine free cash flow.
