(SCF—Indirect Method) The following are Sullivan Corp.’s comparative balance sheet accounts at December 31, 2012 and 2011, with a column showing the increase (decrease) from 2011 to 2012.
|
COMPARATIVE BALANCE SHEETS |
|||
|
2012 |
2011 |
Increase |
|
|
Cash |
$ 815,000 |
$ 700,000 |
$115,000 |
|
Accounts receivable |
1,128,000 |
1,168,000 |
(40,000) |
|
Inventory |
1,850,000 |
1,715,000 |
135,000 |
|
Property, plant, and equipment |
3,307,000 |
2,967,000 |
340,000 |
|
Accumulated depreciation |
(1,165,000) |
(1,040,000) |
(125,000) |
|
Investment in Myers Co. |
310,000 |
275,000 |
35,000 |
|
Loan receivable |
250,000 |
— |
250,000 |
|
Total assets |
$6,495,000 |
$5,785,000 |
$710,000 |
|
Accounts payable |
$1,015,000 |
$ 955,000 |
$ 60,000 |
|
Income taxes payable |
30,000 |
50,000 |
(20,000) |
|
Dividends payable |
80,000 |
100,000 |
(20,000) |
|
Capital lease obligation |
400,000 |
— |
400,000 |
|
Common stock, $1 par |
500,000 |
500,000 |
— |
|
Paid-in capital in excess of |
1,500,000 |
1,500,000 |
— |
|
Retained earnings |
2,970,000 |
2,680,000 |
290,000 |
|
Total liabilities and stockholders’ equity |
$6,495,000 |
$5,785,000 |
$710,000 |
Additional information:
1. On December 31, 2011, 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, 2012. No dividend was paid on Myers’s common stock during the year.
2. During 2012, 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, 2012.
3. On January 2, 2012, Sullivan sold equipment costing $60,000, with a carrying amount of $38,000, for $40,000 cash.
4. On December 31, 2012, 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, 2013.
5. Net income for 2012 was $370,000.
6. Sullivan declared and paid cash dividends for 2012 and 2011 as shown on the next page.
|
2012 |
2011 |
|
|
Declared |
December 15, 2012 |
December 15, 2011 |
|
Paid |
February 28, 2013 |
February 28, 2012 |
|
Amount |
$80,000 |
$100,000 |
Instructions
Prepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2012, using the indirect method.