he income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. VIRTUAL GAMING SYSTEMS Income Statement For the Year Ended December 31, 2021 Net sales $2,600,000 Gain on sale of land 7,000 Total revenues 2,607,000 Expenses: Cost of goods sold $1,650,000 Operating expenses 615,000 Depreciation expense 33,000 Interest expense 34,000 Income tax expense 80,000 Total expenses 2,412,000 Net income $195,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 2020 Assets Current assets: Cash $409,500 $343,800 Accounts receivable 64,000 80,000 Inventory 160,000 145,000 Prepaid rent 4,600 7,200 Long-term assets: Investments 205,000 110,000 Land 215,000 270,000 Equipment 250,000 220,000 Accumulated depreciation (143,000) (110,000) Total assets $1,165,100 $1,066,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $35,000 $98,000 Interest payable 5,100 4,000 Income tax payable 25,000 29,000 Long-term liabilities: Notes payable 265,000 235,000 Stockholders' equity: Common stock 460,000 400,000 Retained earnings 375,000 300,000 Total liabilities and stockholders’ equity $1,165,100 $1,066,000 Additional Information for 2021: Purchase additional investment in stocks for $95,000. Sell land costing $55,000 for $62,000, resulting in a $7,000 gain on sale of land. Purchase $30,000 in equipment by issuing a $30,000 long-term note payable to the seller. No cash is exchanged in the transaction. Declare and pay a cash dividend of $120,000. Issue common stock for $60,000. Required: Prepare the statement of cash flows for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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he income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS Income Statement For the Year Ended December 31, 2021
Net sales		$2,600,000
Gain on sale of land		7,000
Total revenues		2,607,000
Expenses:
Cost of goods sold	$1,650,000
Operating expenses	615,000
Depreciation expense	33,000
Interest expense	34,000
Income tax expense	80,000
Total expenses		2,412,000
Net income		$195,000

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2021	2020
Assets
Current assets:
Cash	$409,500	$343,800
Accounts receivable	64,000	80,000
Inventory	160,000	145,000
Prepaid rent	4,600	7,200
Long-term assets:
Investments	205,000	110,000
Land	215,000	270,000
Equipment	250,000	220,000
Accumulated depreciation	(143,000)	(110,000)
Total assets	$1,165,100	$1,066,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$35,000	$98,000
Interest payable	5,100	4,000
Income tax payable	25,000	29,000
Long-term liabilities:
Notes payable	265,000	235,000
Stockholders' equity:
Common stock	460,000	400,000
Retained earnings	375,000	300,000
Total liabilities and stockholders’ equity	$1,165,100	$1,066,000

Additional Information for 2021:

Purchase additional investment in stocks for $95,000.
Sell land costing $55,000 for $62,000, resulting in a $7,000 gain on sale of land.
Purchase $30,000 in equipment by issuing a $30,000 long-term note payable to the seller. No cash is exchanged in the transaction.
Declare and pay a cash dividend of $120,000.
Issue common stock for $60,000.

Required:

Prepare the statement of cash flows for Virtual Gaming Systems using the direct method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)

VIRTUAL GAMING SYSTEMS
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities:







Net cash flows from operating activities		$0
Cash Flows from Investing Activities:




Net cash flows from investing activities		0
Cash Flows from Financing Activities:




Net cash flows from financing activities		0

Cash at the beginning of the period
Cash at the end of the period		$0
Note: Noncash Activities

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