Question

Following is a partially completed balance sheet for Hoeman Inc. at December 31, 2020, together with...

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.
HOEMAN INC.
Comparative Balance Sheets
At December 31, 2020 and 2019
2020 2019
Assets:
Current assets:
Cash $55,000 $47,000
Accounts receivable 134,000 145,000
Inventory 163,000 181,000
Total current assets $352,000 $373,000
Land 143,000 143,000
Buildings 400,500 271,500
Less: Accumulated depreciation (130,000) (114,500)
Total land & buildings $413,500 $300,000
Total assets $765,500 $673,000
Liabilities:
Current liabilities:
Accounts payable $164,000 $193,500
Note payable 162,000 125,500
Total current liabilities $326,000 $319,000
Long-term debt $172,500 $126,500
Stockholders' Equity:
Common stock $53,500 $46,000
Retained earnings 213,500 181,500
Total stockholders' equity $267,000 $227,500
Total liabilities and stockholders' equity $765,500 $673,000

Required:

  1. Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method.
HOEMAN INC.
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash flows from operating activities:
Net income $97,500
Add (deduct) items not affecting cash:
Decrease in accounts receivable 11,000
Cash flows from investing activities:
Cash paid to acquire new buildings $(129,000)
  
Cash flows from financing activities:
Payment of cash dividends on common stock (65,500)
Cash balance, January 1, 2020
Cash balance, December 31, 2020

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