Q17E Jobim Inc. had the following con... [FREE SOLUTION]

Chapter 23: Q17E (page 1380)

Jobim Inc. had the following condensed balance sheet at the end of operations for 2016.
JOBIM INC.
BALANCE SHEET
DECEMBER 31, 2016
Cash $ 8,500 Current liabilities $ 15,000
Current assets other than cash 29,000 Long-term notes payable 25,500
Equity investments 20,000 Bonds payable 25,000
Plant assets (net) 67,500 Common stock 75,000
Land 40,000 Retained earnings 24,500
$165,000 $165,000
During 2017, the following occurred.
1. A tract of land was purchased for $9,000.
2. Bonds payable in the amount of $15,000 were redeemed at par.
3. An additional $10,000 in common stock was issued at par.
4. Dividends totaling $9,375 were paid to stockholders.
5. Net income was $35,250 after allowing 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. No unrealized gains or losses were recorded on these investments in 2017.
8. Both current assets (other than cash) and current liabilities remained at the same amount.
Instructions
(a) Prepare a statement of cash flows for 2017 using the indirect method.
(b) Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2017

Expert verified

(a) The statement of cash flow is prepared using indirect method in step 1.

(b) The condensed balance is prepared in step 2

Jobim Inc
Statement of cash flows
For the year ended December 31, 2017
Particulars	Amount ($)	Amount ($)

Cash flows from operating activities
Net Income		$35,250
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation expense	13,500
Gain on sale of investments	-2,000	11,500
Net cash provided by operating activities		46,750

Cash flow from investing activities
Purchase of land	-9,000
Sale of available-for-sale investments	12,875
Net cash provided by investing activities		3,875

Cash flow from financing activities
Redemption of bonds payable	-9,375
Dividend payment	-15,000
Issuance of capital stock	10,000
Net cash used by financing activities		-14,375
Net Increase in cash		$36,250
Cash, January 1, 2017		8,500
Cash, December 31, 2017		$44,750

Jobim Inc
Statement of cash flows
For the year ended December 31, 2017
Assets	Amount ($)	Equities	Amount ($)
Cash	44,750	Current Liabilities	15,000
Current assets other than cash	29,000	Long-term notes payable	25,500
Investments (20,000-(12,875-2,000))	9,125	Bonds payable (25,000-15,000+22,500)	32,500
Plant assets (net)	54,000	Capital stock	85,000
Land (40,000+9,000+22,500)	71,500	Retained Earnings (24,500+35,250-9,375)	50,375
Total	$208,375	Total	$208,375

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MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017 (\(000 OMITTED)
Sales revenue		\)3,800
Expenses
Cost of goods sold	\(1,200
Salaries and benefits	725
Heat, light and power	75
Depreciation	80
Property tax	19
Patent amortization	25
Miscellaneous expenses	10
Interest	30	2,164
Income before taxes		1,636
Income tax		818
Net income		818
Retained earnings 鈥� Jan 1, 2017		310
		1,128
Stock dividend declared and issued		600
Retained earnings Dec 31, 2017		\)528

MORTONSON COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 (\(000 OMITTED)
Assets	2017	2016
Current assets
Cash	\)333	\(100
U.S treasury notes (available for sale)	10	50
Accounts receivables	780	500
Inventory	720	560
Total current assets	1,843	1,210

Long-term assets
Land	150	70
Building and equipment	910	600
Accumulated depreciation 鈥� building and equipment	(200)	(120)
Patent (less: amortization)	105	130
Total long-term assets	965	680
Total assets	\)2,808	\(1,890

Liabilities and stockholder鈥檚 equity
Current liabilities
Account payable	\)420	\(330
Income tax payable	40	30
Notes payable	320	320
Total current liabilities	780	680
Long-term note payable	200	200
Total liabilities	980	880
Stockholder鈥檚 equity
Common stock	1,300	700
Retained earnings	528	310
Total stockholder鈥檚 equity	1,828	1,010
Total liabilities and stockholder鈥檚 equity	\)2,808	$1,890

	2017	2016	Increase (Decrease)
Selected balance sheet accounts
Assets
Accounts receivables	\(34,000	\)24,000	\(10,000
Property, plant and equipment	277,000	247,000	30,000
Accumulated depreciation 鈥� plant assets	(178,000)	(167,000)	(11,000)

Liabilities and stockholder鈥檚 equity
Bonds payable	\)49,000	\(46,000	\)3,000
Dividend payable	8,000	5,000	3,000
Common stock, \(1 par	22,000	19,000	3,000
Additional paid-in-capital	9,000	3,000	6,000
Retained earnings	104,000	91,000	13,000