Answer:
See explanation
Explanation:
Requirement A
See the image Below:
Requirement B
LANSBURY INC.
BALANCE SHEET
As at December 31, 2020
Assets
Cash $37,000
Accounts receivable $41,600
Investment $20,400 (Note - 1)
Plant asset $81,000
Less: Accumulated depreciation ($11,000)
Book value of Plant asset $70,000
Land $53,000
Total assets $222,000
Liabilities and Stockholders' Equity
Liabilities
Accounts payable $30,000
Notes payable $25,000
Total liabilities $55,000
Stockholders' Equity
Common Stock $120,000
Retained earnings $ 47,000 (Note - 2)
Total stockholders' equity = $167,000
Total liabilities & Stockholders' Equity = $222,000
Note - 1:
Sold investment's cost value calculation -
Selling price = $15,000
Less: Gain on sale = ($3,400)
Cost price = $11,600
Investment during 2019 = $32,000
Sale of Investment (book value) $11,600
Remaining value of Investment = $20,400
Note - 2:
Beginning $23,200
Add: Net Income $32,000
Less: Dividend ($8,200)
Ending retained earnings = $47,000
Requirement C
1. Cash flow to net income ratio:
It shows how much cash flows from operating activities during the year over a specific net income.
We know, Cash flow to net income ratio = [tex]\frac{Cash flow from operating activities}{Net Income}[/tex]
Cash flow to net income ratio = [tex]\frac{19,200}{32,000}[/tex]
Cash flow to net income ratio = 60%
2. Operating cash flow ratio:
It shows how much cash flows from operating activities during the year from the use of current liabilities.
We know, Operating Cash flow ratio = [tex]\frac{Cash flow from operating activities}{Current liabilities}[/tex]
Operating Cash flow ratio = [tex]\frac{19,200}{30,000}[/tex]
Operating Cash flow ratio = 64%
Note: Here, accounts payable is the only current liabilities as notes payable has a long-term value.
