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| Harding Industries, Inc. |
| Income Statement |
| For the Year Ended December 31, 2014 |
| Sales revenues | | $950,000 |
| Less: Cost of goods sold | | 385,000 |
| Gross profit | | $565,000 |
| Less operating expenses: | | |
| Salaries and wages expense | $187,000 | |
| Insurance expense | 12,500 | |
| Depreciation expense | 57,900 | |
| Other operating expenses | 87,000 | |
| | Total operating expenses | | 344,400 |
| Operating income | | $220,600 |
| Plus other income and less other expenses: | | |
| Interest expense | $5,500 | |
| Gain on sale of PP and E | 3,000 | |
| | Total other income and expenses | | 2,500 |
| Income before income taxes | | $218,100 |
| Less: Income tax expense | | 65,430 |
| Net income | | $152,670 |
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Additional information follows:
| a. | Sold plant asset for $ 4 comma 200$4,200. The original cost of this plant asset was $ 10 comma 100$10,100 and it had $ 8 comma 900$8,900 of accumulated depreciation associated with it. |
| b. | Paid $ 6 comma 500$6,500 on the bonds payable; issued $ 44 comma 500$44,500 of new bonds payable. |
| c. | Declared and paid cash dividends of $ 31 comma 600$31,600. |
| d. | Purchased new investment for $ 12 comma 000$12,000. |
| e. | Purchased new equipment for $ 25 comma 100$25,100. |
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| Harding Industries, Inc. |
| Comparative Balance Sheets |
| December 31, 2014 and 2013 |
| Assets | 2014 | 2013 |
| Current assets: | | |
| Cash | $472,000 | $285,000 |
| Accounts receivable | 79,000 | 129,000 |
| Inventory | 335,000 | 216,000 |
| Prepaid insurance | 7,500 | 5,500 |
| Total current assets | $893,500 | $635,500 |
| | | | |
| Property, plant, and equipment | $610,000 | $595,000 |
| Less: Accumulated depreciation | (157,000) | (108,000) |
| Investments | 91,000 | 79,000 |
| Total assets | $1,437,500 | $1,201,500 |
| | | | |
| Liabilities | | |
| Current liabilities: | | |
| Accounts payable (inventory purchases) | $60,000 | $32,000 |
| Wages payable | 16,400 | 17,300 |
| Interest payable | 1,700 | 800 |
| Income taxes payable | 56,430 | 10,000 |
| Other accrued expenses payable | 6,200 | 3,700 |
| Total current liablities | $140,730 | $63,800 |
| | | | |
| Long-term liabilities | 60,000 | 22,000 |
| Total liabilities | $200,730 | $85,800 |
| | | | |
| Stockholders' equity | | |
| Common stock | $602,000 | $602,000 |
| Retained earnings | 634,770 | 513,700 |
| Total stockholders' equity | $1,236,770 | $1,115,700 |
| | | | |
| Total liabilities and equity | $1,437,500 | $1,201,500 |
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| | Harding Industries, Inc. |
| | Statement of Cash Flows (Indirect Method) |
| | For the Year Ended December 31, 2014 |
| | Operating Activities: | | |
| | Net income | | |
| | Adjustments to reconcile net income to cash basis | | |
| | Depreciation expense | | |
| | Gain on sale of plant asset | | |
| | Decrease in accounts receivable | | |
| | Increase in inventory | | |
| | Increase in prepaid insurance | | |
| | Increase in accounts payable | | |
| | Decrease in wages payable | | |
| | Increase in interest payable | | |
| | Increase in taxes payable | | |
| | Increase in other accrued operating expenses | | |
| | Net cash provided by (used for) operating activities | | |
| | Investing Activities: | | |
| | Purchase of new investments | | |
| | Proceeds on sale of plant asset | | |
| | Purchase of equipment | | |
| | Net cash provided by (used for) investing activities | | |
| | Financing Activities: | | |
| | Dividends paid | | |
| | Repayment of long-term debt | | |
| | Proceeds from bond issuance | | |
| | Net cash provided by (used for) financing activities | | |
| | Net increase (decrease) in cash | | |
| | Cash, beginning of the year | | |
| | Cash, end of the year | | |
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