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| Hoover Industries, Inc. |
| Income Statement |
| For the Year Ended December 31, 2014 |
| Sales revenues | | $953,000 |
| Less: Cost of goods sold | | 377,000 |
| Gross profit | | $576,000 |
| Less operating expenses: | | |
| Salaries and wages expense | $184,000 | |
| Insurance expense | 12,500 | |
| Depreciation expense | 44,100 | |
| Other operating expenses | 82,000 | |
| | Total operating expenses | | 322,600 |
| Operating income | | $253,400 |
| Plus other income and less other expenses: | | |
| Interest expense | $5,800 | |
| Gain on sale of PP and E | 2,500 | |
| | Total other income and expenses | | 3,300 |
| Income before income taxes | | $250,100 |
| Less: Income tax expense | | 75,030 |
| Net income | | $175,070 |
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| Hoover Industries, Inc. |
| Comparative Balance Sheets |
| December 31, 2014 and 2013 |
| Assets | 2014 | 2013 |
| Current assets: | | |
| Cash | $472,000 | $290,000 |
| Accounts receivable | 78,000 | 129,000 |
| Inventory | 325,000 | 216,000 |
| Prepaid insurance | 7,500 | 5,500 |
| Total current assets | $882,500 | $640,500 |
| | | | |
| Property, plant, and equipment | $620,000 | $575,000 |
| Less: Accumulated depreciation | (149,000) | (113,000) |
| Investments | 93,000 | 75,000 |
| Total assets | $1,446,500 | $1,177,500 |
| | | | |
| Liabilities | | |
| Current liabilities: | | |
| Accounts payable (inventory purchases) | $57,000 | $33,000 |
| Wages payable | 16,400 | 17,700 |
| Interest payable | 1,600 | 800 |
| Income taxes payable | 66,030 | 12,500 |
| Other accrued expenses payable | 6,500 | 3,000 |
| Total current liablities | $147,530 | $67,000 |
| | | | |
| Long-term liabilities | 61,000 | 25,000 |
| Total liabilities | $208,530 | $92,000 |
| | | | |
| Stockholders' equity | | |
| Common stock | $606,000 | $606,000 |
| Retained earnings | 631,970 | 479,500 |
| Total stockholders' equity | $1,237,970 | $1,085,500 |
| | | | |
| Total liabilities and equity | $1,446,500 | $1,177,500 |
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Additional information follows:
| a. | Sold plant asset for $4,500. The original cost of this plant asset was $10,100 and it had $8,100 of accumulated depreciation associated with it. |
| b. | Paid $7,000 on the bonds payable; issued $43,000 of new bonds payable. |
| c. | Declared and paid cash dividends of $22,600. |
| d. | Purchased new investment for $18,000. |
| e. | Purchased new equipment for $55,100. --------------------------------------- |
| Hoover 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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