The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Wright Company. Additional information from Wright’s accounting records is provided also. WRIGHT COMPANYComparative Balance SheetsDecember 31, 2021 and 2020 ($ in thousands) 2021 2020 Assets Cash$42 $30 Accounts receivable 73 75 Short-term investment 40 15 Inventory 75 70 Land 50 60 Buildings and equipment 550 400 Less: Accumulated depreciation (115) (75) $715 575 Liabilities Accounts payable$28 $35 Salaries payable 2 5 Interest payable 5 3 Income tax payable 9 12 Notes payable 0 30 Bonds payable 160 100 Shareholders’ Equity Common stock 250 200 Paid-in capital—excess of par 126 100 Retained earnings 135 90 $715 $575 WRIGHT COMPANYIncome StatementFor Year Ended December 31, 2021($ in thousands)Revenues: Sales revenue $380 Expenses: Cost of goods sold$130 Salaries expense 45 Depreciation expense 40 Interest expense 12 Loss on sale of land 3 Income tax expense 70 300 Net income $80 Additional information from the accounting records:Land that originally cost $10,000 was sold for $7,000.The common stock of Microsoft Corporation was purchased for $25,000 as a short-term investment not classified as a cash equivalent.New equipment was purchased for $150,000 cash.A $30,000 note was paid at maturity on January 1.On January 1, 2021, bonds were sold at their $60,000 face value.Common stock ($50,000 par) was sold for $76,000.Net income was $80,000 and cash dividends of $35,000 were paid to shareholders.Required:Prepare the statement of cash flows of Wright Company for the year ended December 31, 2021. Present cash flows from operating activities by the direct method.

Answered: The comparative balance sheets for 2021…

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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The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Wright Company. Additional information from Wright’s accounting records is provided also.

WRIGHT COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in thousands)
	2021		2020
Assets
Cash	$	42		$	30
Accounts receivable		73			75
Short-term investment		40			15
Inventory		75			70
Land		50			60
Buildings and equipment		550			400
Less: Accumulated depreciation		(115	)		(75	)
	$	715			575
Liabilities
Accounts payable	$	28		$	35
Salaries payable		2			5
Interest payable		5			3
Income tax payable		9			12
Notes payable		0			30
Bonds payable		160			100
Shareholders’ Equity
Common stock		250			200
Paid-in capital—excess of par		126			100
Retained earnings		135			90
	$	715		$	575

WRIGHT COMPANY
Income Statement
For Year Ended December 31, 2021
($ in thousands)
Revenues:
Sales revenue			$	380
Expenses:
Cost of goods sold	$	130
Salaries expense		45
Depreciation expense		40
Interest expense		12
Loss on sale of land		3
Income tax expense		70		300
Net income			$	80

Additional information from the accounting records:

Land that originally cost $10,000 was sold for $7,000.
The common stock of Microsoft Corporation was purchased for $25,000 as a short-term investment not classified as a cash equivalent.
New equipment was purchased for $150,000 cash.
A $30,000 note was paid at maturity on January 1.
On January 1, 2021, bonds were sold at their $60,000 face value.
Common stock ($50,000 par) was sold for $76,000.
Net income was $80,000 and cash dividends of $35,000 were paid to shareholders.

Required:
Prepare the statement of cash flows of Wright Company for the year ended December 31, 2021. Present cash flows from operating activities by the direct method.

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Cash flow statement shows the cash inflow and cash outflow of the company that represents the cash transactions due to the operating, investing, and financing activities.

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