Question : 140. The following Newton Corporation’s comparative balance sheets for 2014 and : 1245800

 

140. The following is Newton Corporation’s comparative balance sheets for 2014 and 2013: 

 

 

 

 

 

     December 31,

 

 

 

 

 

 

          

              

 

 

Cash

 

 

 

$        400,000

$        350,000

 

 

Accounts receivable

 

 

          564,000

          584,000

 

 

Inventories

 

 

 

          925,000

          857,500

 

 

Property, plant, and equipment

 

        1,653,500

        1,483,500

 

 

Accumulated depreciation

 

         (582,500)

         (520,000)

 

 

Investment in Trent Corporation

 

          152,500

          137,500

 

 

Loan receivable

 

 

 

 

 

 

 

Total assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

$        507,500

$        477,500

 

 

Income taxes payable

 

 

            15,000

            25,000

 

 

Dividends payable

 

 

            40,000

            45,000

 

 

Capital lease obligation

 

          200,000

 

 

 

Capital stock, common, $1 par

 

          250,000

          250,000

 

 

Additional paid-in capital

 

          750,000

          750,000

 

 

Retained earnings

 

 

       

       

 

 

 

Total liabilities and

 

 

 

 

 

 

stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional information: 

1.

On December 31, 2013, Newton acquired 25 percent of Trent Corporation’s common stock for $137,500. On that date, the carrying value of Trent’s net assets and liabilities (which approximated fair value) was $550,000. Trent reported income of $60,000 for the year ended December 31, 2014. No dividend was paid on Trent’s common stock during the year.

 

 

2.

During 2014, Newton loaned $150,000 to Dalton Company, an unrelated entity. Dalton made the first semi-annual principal payment of $15,000, plus interest at 10 percent, on October 1, 2014.

 

 

3.

On January 2, 2014, Newton sold equipment costing $30,000, with a carrying value of $17,500, for $20,000 cash.

 

 

4.

On January 2, 2014, Newton entered into a capital lease for an office building. The present value of the annual rental payments is $200,000, which equals the fair value of the building. Newton made the first lease payment of $30,000 when due on January 2, 2015.

 

 

5.

Newton’s net income for 2014 was $180,000.

 

 

6.

Newton declared and paid cash dividends for 2014 and 2013 as follows:

 

 

 

 

 

 

 

 

 

 

Declared

 

Dec. 15, 2014

Dec. 15, 2013

 

 

Paid

 

Feb. 28, 2015

Feb. 28, 2014

 

 

Amount

 

$        40,000

$        45,000

 

 

 

 

 

 

 

Required:Prepare a statement of cash flows for Newton Company for 2014 using the indirect method. Include relevant supplemental schedules.