Union Brake Inc.'s comparative balance sheet information at December 31,2017 and 2016, and its income statement for the year ended December 31,2017.

During 2017, the following transactions occurred:

1. Purchased equipment for $20,700 cash.

2. Sold the long-term investment on January 1,2017 for $43,800, resulting in investment income of 19,020.

3. Sold equipment for $7,470 cash that had originally cost $39,720 and had $20,110 of accumulated depreciation.

4. Issued $19,000 of bonds payable at face value.

Required:

1. How much cash was paid in dividends?

2. Prepare a statement of cash flows for Union Brake for the year ended December 31,2017, Using the indirect method.

Transcribed Image Text:

Union Brake Inc. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Operating Profit Loss on sale of equipment Investment income Profit before taxes Income taxes Profit $132,670 41,230 12,140 19,020 $879,000 571,000 $308,000 173,900 134,100 140,980 17,000 123,980 Cash Cash equivalents Accounts receivable Inventory Investment Union Brake Inc. Balance Sheet Information December 31 Land Building and equipment Accumulated depreciation Accounts payable Dividends payable Bonds payable Preferred shares Common shares Retained earnings 2017 $ 43,000 24,780 87,320 113,240 0 75,800 420,530 113,080 11,870 1,800 19,000 80,600 405,080 133,240 2016 $ 23,960 8,600 32,440 78,520 24,780 75,800 439,550 91,960 36,800 1,100 0 80,600 405,080 68,110 Net Change $19,040 16,180 54,880 34,720 (24,780) 0 (19,020) 21,120 (24,930) 700 19,000 0 0 65,130 Union Brake Inc. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Operating Profit Loss on sale of equipment Investment income Profit before taxes Income taxes Profit $132,670 41,230 12,140 19,020 $879,000 571,000 $308,000 173,900 134,100 140,980 17,000 123,980 Cash Cash equivalents Accounts receivable Inventory Investment Union Brake Inc. Balance Sheet Information December 31 Land Building and equipment Accumulated depreciation Accounts payable Dividends payable Bonds payable Preferred shares Common shares Retained earnings 2017 $ 43,000 24,780 87,320 113,240 0 75,800 420,530 113,080 11,870 1,800 19,000 80,600 405,080 133,240 2016 $ 23,960 8,600 32,440 78,520 24,780 75,800 439,550 91,960 36,800 1,100 0 80,600 405,080 68,110 Net Change $19,040 16,180 54,880 34,720 (24,780) 0 (19,020) 21,120 (24,930) 700 19,000 0 0 65,130

Answer rating: 100% (QA)

Req 1 Dividend paid Beginning balance of RE 68110 Add Net income 123980 Less Ending Balance in RE 13... View the full answer