Accounts receivable 435000 less allowance for

Accounts receivable ............................ $435,000
Less: Allowance for doubtful
accounts .................................... (25,000) 410,000
Inventory ............................................... 597,000
Total current assets ...................... 1,357,000
Long-term investments
Debt investments ................................. 299,000
Equity investments .............................. 277,000
Total long-term investments ....... 576,000
Property, plant, and equipment
Land ....................................................... 260,000
Buildings ............................................... 1,040,000
Less: Accum. depreciation—
building ....................................... (152,000 ) 888,000
Equipment ............................................ 600,000
Less: Accum. depreciation—
equipment ................................... (60,000 ) 540,000
Total property, plant, and
equipment ................................... 1,688,000
Intangible assets
Franchises ............................................... 160,000
Patents .................................................. 195,000

Total intangible assets .................. 355,000
Total assets ..................................... $3,976,000

EXERCISE 5-12 (Continued)
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ............................ $ 455,000
Notes payable (short-term) ............ 90,000
Dividends payable ........................... 136,000
Accrued liabilities ............................ 96,000
Total current liabilities ............ $ 777,000
Long-term debt
Notes payable (long-term) .............. 900,000
Bonds payable .................................. 1,000,000
Total long-term liabilities ........... 1,900,000
Total liabilities ............................. 2,677,000
Stockholder’s equity
Paid-in capital
Common stock ($5 par) ............ $1,000,000
Additional paid-in capital ......... 80,000 1,080,000
Retained earnings* ........................... 410,000
Total paid-in capital and
retained earnings ...................
1,490,000
Less: Treasury stock ........................ 191,000
Total stockholders’ equity ....... 1,299,000
Total liabilities and
stockholders’ equity ..............
$3,976,000

EXERCISE 5-12 (Continued)
*Computation of Retained Earnings:
Sales revenue $8,100,000
Investment revenue 63,000
Extraordinary gain 80,000
Cost of goods sold (4,800,000)
Selling expenses (2,000,000)
Administrative expenses (900,000)
Interest expense (211,000 )
Net income $ 332,000
Beginning retained earnings $ 78,000
Net income 332,000
Ending retained earnings $410,000
Or ending retained earnings can be computed as follows:
Total stockholders’ equity $1,299,000
Add: Treasury stock 191,000
Less: Paid-in capital in excess of par 1,080,000
Ending retained earnings $ 410,000
Note to instructor: There is no dividends account. Thus, the 12/31/14
retained earnings balance already reflects any dividends declared.
EXERCISE 5-13 (15–20 minutes)
(a) 4. (f) 1. (k) 1.
(b) 3. (g) 5. (l) 2.

(c) 4. (h) 4. (m) 2.
(d) 3. (i) 5.
(e) 1. (j) 4.

EXERCISE 5-14 (25–35 minutes)
Constantine Cavamanlis Inc.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income ........................................................... $44,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense ................................... $ 6,000
Increase in accounts receivable .................. (3,000)
Increase in accounts payable ...................... 5,000 8,000
Net cash provided by operating activities ........ 52,000
Cash flows from investing activities
Purchase of equipment ...................................... (17,000)
Cash flows from financing activities
Issuance of common stock ................................ 20,000
Payment of cash dividends ................................ (23,000 )
Net cash used by financing activities ............... (3,000 )
Net increase in cash ................................................. 32,000
Cash at beginning of year ........................................ 13,000
Cash at end of year ................................................... $45,000

EXERCISE 5-15 (25–35 minutes)
(a) Zubin Mehta Corporation
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income ........................................................... $160,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense ................................... $17,000
Loss on sale of investments ........................ 10,000
Decrease in accounts receivable ................ 5,000
Decrease in current liabilities ...................... (17,000) 15,000
Net cash provided by operating activities ........ 175,000
Cash flows from investing activities
Sale of investments ............................................ 12,000
[($74,000 – $52,000) – $10,000]
Purchase of
equipment .......................