Question

Following is a partially completed balance sheet for Hoeman Inc. at December 31, 2020, together with comparative data for the year ended December 31, 2019. From the statement of cash flows for the year ended December 31, 2020, you determine the following:

• Net income for the year ended December 31, 2020, was $97,500.
• Dividends paid during the year ended December 31, 2020, were $65,500.
• Accounts receivable decreased $11,000 during the year ended December 31, 2020.
• The cost of new buildings acquired during 2020 was $129,000.
• No buildings were disposed of during 2020.
• The land account was not affected by any transactions during the year, but the fair value of the land at December 31, 2020, was $187,500.

Required:

1. Complete the December 31, 2020, balance sheet. (Hint: Long-term debt is the last number to compute to make the balance sheet balance.)

HOEMAN INC.
Comparative Balance Sheets
At December 31, 2020 and 2019
	2020	2019
Assets:
Current assets:
Cash	$55,000	$47,000
Accounts receivable		145,000
Inventory	163,000	181,000
Total current assets		$373,000
Land		143,000
Buildings		271,500
Less: Accumulated depreciation	(130,000)	(114,500)
Total land & buildings		$300,000
Total assets		$673,000
Liabilities:
Current liabilities:
Accounts payable		$193,500
Note payable	162,000	125,500
Total current liabilities	$326,000	$319,000
Long-term debt		$126,500
Stockholders' Equity:
Common stock	$53,500	$46,000
Retained earnings		181,500
Total stockholders' equity		$227,500
Total liabilities and stockholders' equity		$673,000

Answer 1

HOEMAN INC.
Comparative Balance Sheets
At December 31,2020 and 2019
	2020	2019
Assets :
Current assets :
Cash	$ 55,000	$ 47,000
Accounts receivable (Note 1 )	$ 134,000	$ 145,000
Inventory	$ 163,000	$ 181,000
Total Current Assets (Note 2 )	$ 352,000	$ 373,000
Land (Note 3 )	$ 143,000	$ 143,000
Buildings (Note 4 )	$ 400,500	$ 271,500
Less: Accumulated Depreciation	($130,000)	($114,500)
Total Land & Buildings (Note 5 )	$ 413,500	$ 300,000
Total Assets (Note 6 )	$ 765,500	$ 673,000
Liabilities :
Current Liabilities :
Accounts Payable (Note 7 )	$ 164,000	$ 193,500
Note Payable	$ 162,000	$ 125,500
Total Current Liabilities	$ 326,000	$ 319,000
Long term debt (Note 10 )	$ 172,500	$ 126,500
Stockholder's Equity :
Common stock	$ 53,500	$ 46,000
Retained Earnings (Note 8 )	$ 213,500	$ 181,500
Total stockholder's equity (Note 9)	$ 267,000	$ 227,500
Total Liabilities and Stockholder's equity (Note 11)	$ 765,500	$ 673,000

Note 1 : To calculate the Accounts Receivable :
Particulars	Amount($)
Accounts Receivable at 2019	$ 145,000
Less: Accounts receivable decreased	($11,000)
Accounts Receivable at 2020	$ 134,000
Note 2 : To Calculate the Total Current Assets :
Particulars	Amount($)
Cash	$ 55,000
Accounts receivable (Note 1 )	$ 134,000
Inventory	$ 163,000
Total Current Assets	$ 352,000
Note 3 : To Calculate the Land :
Land account was not affected by any transactions
During the year.But the Fair value of land at
December 31,2020 was $ 187,500
so, Land account is valued at cost for 2020 i.e $ 143,000
Note 4 : To calculate the Buildings :
Particulars	Amount($)
Building at 2019	$ 271,500
Add: Purchase of new building	$ 129,000
Building at 2020	$ 400,500

Note 5 : To Calculate the Total Land & Buildings :
Particulars	Amount($)
Land (Note 3 )	$ 143,000
Buildings (Note 4 )	$ 400,500
Less: Accumulated Depreciation	($130,000)
Total Land & Buildings (Note 5 )	$ 413,500
Note 6 : To Calculate the Total Assets :
Particulars	Amount($)
Total Current Assets (Note 2 )	$ 352,000
Total Land & Buildings (Note 5 )	$ 413,500
Total Assets	$ 765,500
Note 7 : To Calculate the Accounts Payable :
Particulars	Amount($)
Total Current Liabilities at 2020 (Given )	$ 326,000
Less: Note Payable (Given )	($162,000)
Accounts Payable	$ 164,000
Note 8 : To Calculate the Retained earnings :
Particulars	Amount($)
Retained Earnings at 2019	$ 181,500
Add: Net income	$ 97,500
Less: Dividends	($65,500)
Retained Earnings at 2020	$ 213,500
Note 9 : To Calculate the Total Stockholder's equity :
Particulars	Amount($)
Common stock	$ 53,500
Retained Earnings (Note 8 )	$ 213,500
Total stockholder's equity	$ 267,000

Note 10 : To Calculate the Long Term debt :

Total Assets = Total Liabilities and Stockholder's equity

Total Assets = Total Current Liabilities + Long term debt + Total Stockholder's equity

Long term debt = Total assets - Total Current liabilities - Total stockholder's equity

Long term debt = $ 765,500 - $ 326,000 - $ 267,000

Long term debt = $ 172,500

Note 11 : To Calculate the Total liabilities and stockholders equity :
Particulars	Amount($)
Total Current Liabilities (Given )	$ 326,000
Long term debt (Note 10 )	$ 172,500
Total stockholder's equity (Note 9)	$ 267,000
Total Liabilities and Stockholder's equity	$ 765,500