The comparative balance sheets and income statements for Gypsy Company follow: Additional Data During Year 2, the company sold equipment for $23,500; it had originally cost $38,000. Accumulated depreciation on this equipment was $16,000 at the time of the sale. The company sold land that had cost $6,000, resulting in the recognition of a $100 loss. Also, common stock was issued in exchange for title to land that was valued at $22,000 at the time of exchange. Prepare a statement of cash flows using the indirect method (don’t forget the supplementary noncash activities shown after the statement).
The comparative balance sheets and income statements for Gypsy Company follow: Additional Data During Year 2, the company sold equipment for $23,500; it had originally cost $38,000. Accumulated depreciation on this equipment was $16,000 at the time of the sale. The company sold land that had cost $6,000, resulting in the recognition of a $100 loss. Also, common stock was issued in exchange for title to land that was valued at $22,000 at the time of exchange. Prepare a statement of cash flows using the indirect method (don’t forget the supplementary noncash activities shown after the statement).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The comparative balance sheets and income statements for Gypsy Company follow:
Additional Data
- During Year 2, the company sold equipment for $23,500; it had originally cost $38,000.
Accumulated depreciation on this equipment was $16,000 at the time of the sale. - The company sold land that had cost $6,000, resulting in the recognition of a $100 loss.
- Also, common stock was issued in exchange for title to land that was valued at $22,000 at the time of exchange.
Prepare a statement of
![Assets
Cash
Accounts receivable
Inventory
Equipment
Accumulated depreciation-equipment
Land
Total assets
Liabilities and equity
Accounts payable (inventory)
Long-term debt
Common stock
Retained earnings
Total liabilities and equity
Balance Sheets
As of December 31
$
$
Year 2
$
32,50
0
4,750
11,20
0
45,00
0
(17,8
00
28,00
0
103,6
50
$ 3,750
5,800
47,00
0
47,10
0
103,6
50
$
Year 1
16,30
0
2,800
9,800
52,00
0
(21,8
00
12,00
0
71,10
0
$ 4,900
7,800
25,00
0
33,40
0
71,10
0
)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41b40934-c0c0-4578-9579-79eacc0d4038%2F9ce0f151-bfb4-4f8c-8438-4d33e382ebad%2Fvsndawb_processed.png&w=3840&q=75)
Transcribed Image Text:Assets
Cash
Accounts receivable
Inventory
Equipment
Accumulated depreciation-equipment
Land
Total assets
Liabilities and equity
Accounts payable (inventory)
Long-term debt
Common stock
Retained earnings
Total liabilities and equity
Balance Sheets
As of December 31
$
$
Year 2
$
32,50
0
4,750
11,20
0
45,00
0
(17,8
00
28,00
0
103,6
50
$ 3,750
5,800
47,00
0
47,10
0
103,6
50
$
Year 1
16,30
0
2,800
9,800
52,00
0
(21,8
00
12,00
0
71,10
0
$ 4,900
7,800
25,00
0
33,40
0
71,10
0
)
![Income Statement
For the Year Ended December 31, Year 2
Sales revenue
Cost of goods sold
Gross margin
Depreciation expense
Operating income
Gain on sale of equipment
Loss on disposal of land
Net income
$
$
61,20
0
(24,5
00
5)
36,70
0
(12,0
00
24,700
1,500
(100)
26,10
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41b40934-c0c0-4578-9579-79eacc0d4038%2F9ce0f151-bfb4-4f8c-8438-4d33e382ebad%2Ftg3ztrt_processed.png&w=3840&q=75)
Transcribed Image Text:Income Statement
For the Year Ended December 31, Year 2
Sales revenue
Cost of goods sold
Gross margin
Depreciation expense
Operating income
Gain on sale of equipment
Loss on disposal of land
Net income
$
$
61,20
0
(24,5
00
5)
36,70
0
(12,0
00
24,700
1,500
(100)
26,10
0
Expert Solution
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Step 1 Introduction
The cash flow statement is prepared to record the cash flow from various activities during the period. The various activities for the cash flow statement are classified as operating, investing and financing activities.
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