The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 32,500 $ 16,300 Accounts receivable 4,750 2,800 Inventory 11,200 9,800 Equipment 45,000 52,000 Accumulated depreciation—equipment (17,800 ) (21,800 ) Land 28,000 12,000 Total assets $ 103,650 $ 71,100 Liabilities and equity Accounts payable (inventory) $ 3,750 $ 4,900 Long-term debt 5,800 7,800 Common stock 47,000 25,000 Retained earnings 47,100 33,400 Total liabilities and equity $ 103,650 $ 71,100 Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 61,200 Cost of goods sold (24,500) Gross margin 36,700 Depreciation expense (12,000) Operating income 24,700 Gain on sale of equipment 1,500 Loss on disposal of land (100) Net income $ 26,100 Additional Data During Year 2, the company sold equipment for $21,500; it had originally cost $36,000. Accumulated depreciation on this equipment was $16,000 at the time of the sale. The company sold land that had cost $6,000. This land was sold for $5,900, 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. Required Prepare a statement of cash flows using the indirect method (don’t forget the supplementary noncash activities shown after the statement).
The comparative
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Balance Sheets |
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Year 2 |
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Year 1 |
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Assets |
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Cash |
$ |
32,500 |
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$ |
16,300 |
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4,750 |
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2,800 |
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Inventory |
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11,200 |
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9,800 |
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Equipment |
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45,000 |
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52,000 |
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(17,800 |
) |
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(21,800 |
) |
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Land |
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28,000 |
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12,000 |
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Total assets |
$ |
103,650 |
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$ |
71,100 |
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Liabilities and equity |
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Accounts payable (inventory) |
$ |
3,750 |
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$ |
4,900 |
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Long-term debt |
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5,800 |
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7,800 |
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Common stock |
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47,000 |
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25,000 |
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47,100 |
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33,400 |
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Total liabilities and equity |
$ |
103,650 |
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$ |
71,100 |
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Income Statement |
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Sales revenue |
$ |
61,200 |
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Cost of goods sold |
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(24,500) |
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Gross margin |
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36,700 |
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Depreciation expense |
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(12,000) |
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Operating income |
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24,700 |
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Gain on sale of equipment |
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1,500 |
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Loss on disposal of land |
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(100) |
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Net income |
$ |
26,100 |
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Additional Data
- During Year 2, the company sold equipment for $21,500; it had originally cost $36,000. Accumulated depreciation on this equipment was $16,000 at the time of the sale.
- The company sold land that had cost $6,000. This land was sold for $5,900, 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.
Required
Prepare a statement of
Cash flow statement is helpful for the stakeholders that they can identify the organization's financial situation that they have a sufficient amount of cash for out their obligation. It can be repaired using direct and indirect methods.
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