Discuss the sales of the long-term investments

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Reference no: EM131775949

Yamile Romero and Maria Rodriguez formed a partnership. They provided the following information for their Company and request you to prepare:

(1) Prepare a complete statement of cash flows for calendar-year 2015 using the indirect method.

Romero and Rodriguez Company
Balance Sheets
At December 31

 

2015

2014

Assets:

 

 

Cash

$29,568

$27,648

Accounts receivable

38,616

35,280

Merchandise inventory

87,750

74,052

Long-term investments

67,080

67,680

Machinery

210,600

174,600

Accumulated depreciation

(40,260)

(37,440)

Total assets

$393,354

$341,820

Liabilities:

 

 

Accounts payable

$78,000

$48,456

Income taxes payable

12,870

12,240

Bonds payable

58,500

79,200

Total liabilities

$149,370

$139,896

Equity:

 

 

Common stock

140,400

115,200

Paid-in capital in excess of par

15,600

10,800

Retained earnings

87,984

75,924

Total equity

$243,984

$201,924

Total liabilities and equity

$393,354

$341,820

 

Romero and Rodriguez Company
Income Statement
For Year Ended December 31, 2015

Sales

 

$288,000

Cost of goods sold

$97,080

 

Depreciation expense

35,280

 

Other operating expenses

57,600

 

Interest expense

2,400

(192,360)

Other gains (losses):

 

 

Loss on sale of equipment

 

(10,080)

Income before taxes

 

85,560

Income taxes expense

 

33,180

Net income

 

$52,380

Additional information:

(1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.

(2) Old machinery with an original cost of $45,060 was sold for $2,520 cash.

(3) New machinery was purchased for $81,060 cash.

(4) Cash dividends of $40,320 were paid.

(5) Additional shares of stock were issued for cash.

Reference no: EM131775949

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