Question

Omega Corporation’s comparative balance sheet accounts worksheet at December 31, 2014 and 2013, follow, together with a column showing the increase (decrease) from 2013 to 2014.


Presented next are the balance sheet accounts of Bergen Corporation as of December 31, 2014 and 2013.
Additional Information:
• On January 2, 2014, Bergen sold all of its marketable investment securities for $95,000 cash.
• On March 10, 2014, Bergen paid a cash dividend of $50,000 on its common stock. No other dividends were paid or declared during 2014.
• On April 15, 2014, Bergen issued 2,000 shares of its common stock for land having a fair value of $100,000.
• On May 25, 2014, Bergen borrowed $450,000 from an insurance company. The underlying promissory note bears interest at 15% and is payable in three equal annual installments of $150,000. The first payment is due on May 25, 2015.
• On June 15, 2014, Bergen purchased equipment for $392,000 cash.
• On July 1, 2014, Bergen sold equipment costing $52,000, with a book value of $28,000 for $33,000 cash.
• On December 31, 2014, Bergen leased equipment from Tilden Company for a 10-year period. Equal payments under the lease are $25,000 due on December 31 each year. The first payment was made on December 31, 2014. The present value at December 31, 2014, of the 10 lease payments is $158,000. Bergen appropriately recorded the lease as a capital lease. The $25,000 lease payment due on December 31, 2015, will consist of $9,000 principal and $16,000 interest.
• Bergen's net income for 2014 is $253,000.
• Bergen owns a 10% interest in the voting common stock of Mason, Inc. Mason reported net income of $120,000 for the year ended December 31, 2014, and paid a common stock dividend of $55,000 during 2014.

Required:
Prepare a cash flow statement for Bergen using the indirect method for 2014.
Additional Information:
• On December 31, 2013, Omega acquired 25% of Belle Company's common stock for $275,000. On that date, the carrying value of Belle's assets and liabilities, which approximated their fair values, was $1,100,000. Belle reported income of $120,000 for the year ended December 31, 2014. No dividend was paid on Belle's common stock during the year.
• During 2014, Omega loaned $300,000 to Chase Company, an unrelated company. Chase made the first semiannual principal repayment of $30,000 plus interest at 10%, on October 1, 2014.
• On January 2, 2014, Omega sold equipment for $40,000 cash that cost $60,000 and had a carrying amount of $35,000.
• On December 31, 2014, Omega entered into a capital lease for an office building. The present value of the annual rental payments is $400,000, which equals the building's fair value. Omega made the first rental payment of $60,000, when due, on January 2, 2015.
• Net income for 2014 was $360,000.
• Omega declared and paid cash dividends for 2014 and 2013 as follows:


Required:
Prepare an indirect method statement of cash flows for Omega Corporation for the year ended December 31, 2014, using the worksheet method illustrated in the appendix to thischapter.


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  • CreatedSeptember 10, 2014
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