Jobim Inc., had the following condensed balance sheet at the end of operations f

Question

Jobim Inc., had the following condensed balance sheet at the end of operations for 2013. JOBIM INC. BALANCE SHEET DECEMBER 31, 2013 Cash $8,500 Current liabilities $15,000 Current assets other than cash 29,000 Long-term notes payable 25,500 Investments 20,000 Bonds payable 25,000 Plant assets (net) 67,500 Capital stock 75,000 Land 40,000 Retained earnings 24,500 $165,000 $165,000 During 2014, the following occurred. 1. A tract of land was purchased for $9,000. 2. Bonds payable in the amount of $15,000 were retired at par. 3. An additional $10,000 in capital stock was issued at par. 4. Dividends totaling $9,375 were paid to stockholders. 5. Net income was $35,250 after deducting depreciation of $13,500. 6. Land was purchased through the issuance of $22,500 in bonds. 7. Jobim Inc. sold part of its investment portfolio for $12,875. This transaction resulted in a gain of $2,000 for the company. The company classifies the investments as available-for-sale. 8. Both current assets (other than cash) and current liabilities remained at the same amount. Prepare a statement of cash flows for 2014 using the indirect method. Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2014

Explanation / Answer

Answer 1. Jobim Inc. Statement of Cash Flows (Indirect Method) For the Year ended Dec. 31, 2014 Cash Flow from opearating activities: Net Income            35,250 Gain on Sale of Investments            (2,000) Deprecition Expenses            13,500            11,500 Net Cash provided by operating activities            46,750 Cash flow from Investing Activities Purchase of Land            (9,000) Sale of Investments            12,875 Cash Flow / (used) from Investing activities              3,875 Cash Flow from Financing Activities Cash dividend paid            (9,375) Repayment of Bonds         (15,000) Issue of Capital stock            10,000 Cash Flow from Financing Activities          (14,375) Net Increase / (Decrease) in Cash            36,250 Cash & Cash Equivalent as on Dec 31, 2013              8,500 Cash & Cash Equivalent as on Dec 31, 2014            44,750 Noncash investing/financing activities: Issuance of Bonds for Land            22,500 Answer 2. Jobim Inc. Balance sheet For the Year ended Dec. 31, 2014 Assets Current Assets Cash            44,750 Other Current Assets            29,000            73,750 Non-Current Assets Investments              9,125 Fixed Assets Land            71,500 Plant Assets (net)            54,000          125,500 Total Assets          208,375 Liabilities & Shareholders' Equity Liabilities Current Liabilities            15,000 Long Term Notes Payable            25,500 Bonds Payable            32,500 Total Liabilities            73,000 Shareholders' Equity Common Stock            85,000 Retained Earnings (24500 + 35250 -9375)            50,375 Total Shareholders's Equity          135,375 Total liabilities & Shareholders' Equity          208,375

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