Question

Riverbed Inc., had the following condensed balance sheet at the end of operations for 2019. RIVERBED INC.

BALANCE SHEET
DECEMBER 31, 2019
Cash $8,600 Current liabilities $15,000
Current assets other than cash 28,800 Long-term notes payable 25,600
Equity invesments 19,900 Bonds payable 25,000
Plant assets (net) 67,800 Common stock 75,000
Land 40,200 Retained earnings 24,700
$165,300 $165,300
During 2020, the following occurred.
1. A tract of land was purchased for $9,000.
2. Bonds payable in the amount of $15,000 were redeemed at par.
3. An additional $10,000 in common stock was issued at par.
4. Dividends totaling $9,400 were paid to stockholders.
5. Net income was $30,500 after allowing depreciation of $13,700.
6. Land was purchased through the issuance of $22,300 in bonds.
7. Riverbed Inc. sold part of its investment portfolio for $12,800. This transaction resulted in a gain of $2,000 for the company. No unrealized gains or losses were recorded on these investments in 2020.
8. Both current assets (other than cash) and current liabilities remained at the same amount.
A. Prepare a statement of cash flows for 2014 using the indirect method.
B. Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2014

Answer 1

Riverbed Inc.

A. RIVERBED INC.

STATEMENT OF CASH FLOWS

DECEMBER 31, 2020

Operating activities:

Net income $30,500

Depreciation expense 13,700

Gain from investment (2,000)

Cash from operations $42,200

No changes in working capital

Net cash from operations $42,200

Investing activities:

Sale of equity investment 12,800

Purchase of land (9,000)

Financing activities:

Bonds payable (15,000)

Bonds payable 22,300

Common stock issued 10,000

Dividends paid (9,400)

Net cash from financing 7,900

Net cash flows $53,900

B. RIVERBED INC.

BALANCE SHEET

DECEMBER 31, 2020

Cash $62,500 Current liabilities $15,000

Current assets other than cash 28,800 Long-term notes payable 25,600

Equity investments 9,100 Bonds payable 32,300

Plant assets (net) 54,100 Common stock 85,000

Land 49,200 Retained earnings 45,800

$203,700 $203,700

Step-by-step explanation:

a) Data and Calculations:

RIVERBED INC.

BALANCE SHEET

DECEMBER 31, 2019

Cash $8,600 Current liabilities $15,000

Current assets other than cash 28,800 Long-term notes payable 25,600

Equity investments 19,900 Bonds payable 25,000

Plant assets (net) 67,800 Common stock 75,000

Land 40,200 Retained earnings 24,700

$165,300 $165,300

Transactions during 2020:

1. Land $9,000 Cash $9,000

2. Bonds payable $15,000 Cash $15,000

3. Cash $10,000 Common stock $10,000

4. Dividends $9,400 Cash $9,400

6. Cash $22,300 Bonds $22,300

7. Cash $12,800 Investment $10,800 Gain from investments $2,000

Non-cash items:

5. Net income $30,500

Depreciation expense $13,700

Gain from investment (2,000)

Cash from operations $42,200

Retained earnings 24,700

Net income 30,500

Dividends (9,400)

Retained earnings 45,800

Cash balance:

Beginning balance $8,600

Cash from operations 42,200

Land (9,000)

Bonds repaid (15,000)

Common stock 10,000

Dividends paid (9,400)

Bonds issued 22,300

Investment sold 12,800

Ending balance $62,500