Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2 Swasey CompanyComparative Balance SheetsAt December 31, 20X1 and 20X21 20X120X22Current assets: 3Cash$460,000.00$1,320,000.004Accounts receivable$1,500,000.00$1,165,000.005Inventories600,000.00640,000.006Long-term assets: 7Plant and equipment4,400,000.004,300,000.008Accumulated depreciation(2,400,000.00)(2,540,000.00)9Land2,000,000.002,875,000.0010Total assets$6,560,000.00$7,760,000.0011Current liabilities: 12Wages payable$1,400,000.00$1,030,000.0013Long-term liabilities: 14Bonds payable0.00770,000.0015Mortgage payable200,000.000.0016Total liabilities1,600,000.001,800,000.0017Stockholders’ equity: 18Common stock750,000.00750,000.0019Paid-in capital in excess of par560,000.00560,000.0020Retained earnings3,650,000.004,650,000.0021Total Stockholders’ equity4,960,000.005,960,000.0022Total liabilities and stockholders’ equity$6,560,000.00$7,760,000.00 Swasey CompanyIncome StatementFor the Year Ended December 31, 20X21Revenues$6,000,000.002Gain on sale of equipment200,000.003Cost of goods sold(3,840,000.00)4Depreciation expense(540,000.00)5Interest expense(20,000.00)6Net income$1,800,000.00 During the year, Swasey Company sold equipment with a book value of $560,000 for $760,000 (original purchase cost of $960,000). New equipment was purchased. Required:1.Prepare a statement of cash flows for Swasey for 20X2.2.Reflect on the relationship between the statement of cash flows and the change in cash.

The cash flow statement shows the cash inflow and cash outflow due to the operating, financing, and…

Answered: Swasey Company provided the following…

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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Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2

Swasey Company

Comparative Balance Sheets

At December 31, 20X1 and 20X2

1		20X1	20X2
2	Current assets:
3	Cash	$460,000.00	$1,320,000.00
4	Accounts receivable	$1,500,000.00	$1,165,000.00
5	Inventories	600,000.00	640,000.00
6	Long-term assets:
7	Plant and equipment	4,400,000.00	4,300,000.00
8	Accumulated depreciation	(2,400,000.00)	(2,540,000.00)
9	Land	2,000,000.00	2,875,000.00
10	Total assets	$6,560,000.00	$7,760,000.00
11	Current liabilities:
12	Wages payable	$1,400,000.00	$1,030,000.00
13	Long-term liabilities:
14	Bonds payable	0.00	770,000.00
15	Mortgage payable	200,000.00	0.00
16	Total liabilities	1,600,000.00	1,800,000.00
17	Stockholders’ equity:
18	Common stock	750,000.00	750,000.00
19	Paid-in capital in excess of par	560,000.00	560,000.00
20	Retained earnings	3,650,000.00	4,650,000.00
21	Total Stockholders’ equity	4,960,000.00	5,960,000.00
22	Total liabilities and stockholders’ equity	$6,560,000.00	$7,760,000.00

Swasey Company

Income Statement

For the Year Ended December 31, 20X2

1	Revenues	$6,000,000.00
2	Gain on sale of equipment	200,000.00
3	Cost of goods sold	(3,840,000.00)
4	Depreciation expense	(540,000.00)
5	Interest expense	(20,000.00)
6	Net income	$1,800,000.00

During the year, Swasey Company sold equipment with a book value of $560,000 for $760,000 (original purchase cost of $960,000). New equipment was purchased.

	Required:
1.	Prepare a statement of cash flows for Swasey for 20X2.
2.	Reflect on the relationship between the statement of cash flows and the change in cash.

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