The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. VIRTUAL GAMING SYSTEMSIncome StatementFor the year ended December 31, 2021 Net sales $2,530,000Gain on sale of land 3,500Total revenues 2,533,500Expenses: Cost of goods sold$1,615,000 Operating expenses608,000 Depreciation expense26,000 Interest expense27,000 Income tax expense73,000 Total expenses 2,349,000Net income $184,500 VIRTUAL GAMING SYSTEMSBalance SheetsDecember 31 20212020Assets Current assets: Cash$265,120$206,940Accounts receivable71,70087,000Inventory149,500138,000Prepaid rent4,1806,360Long-term assets: Investments188,000100,000Land211,500263,000Equipment236,000213,000Accumulated depreciation(132,500)(106,500)Total assets$993,500$907,800Liabilities and Stockholders' Equity Current liabilities: Accounts payable$31,500$91,000Interest payable4,3003,300Income tax payable22,20025,500Long-term liabilities: Notes payable251,000228,000Stockholders' equity: Common stock383,000330,000Retained earnings301,500230,000Total liabilities and stockholders’ equity$993,500$907,800 Additional Information for 2021:Purchase additional investment in stocks for $88,000.Sell land costing $51,500 for $55,000, resulting in a $3,500 gain on sale of land.Purchase $23,000 in equipment by issuing a $23,000 long-term note payable to the seller. No cash is exchanged in the transaction.Declare and pay a cash dividend of $113,000.Issue common stock for $53,000. Required:Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.) VIRTUAL GAMING SYSTEMSStatement of Cash FlowsFor the Year Ended December 31, 2021Cash Flows from Operating Activities Adjustments to reconcile net income to net cash flows from operating activities: Net cash flows from operating activities $0Cash Flows from Investing Activities Net cash flows from investing activities 0Cash 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 $0Note: Noncash Activities

A cash flow statement refers to the documents of a company that reflects the movements of cash coming in and coming out of a company.Preparing the cash flow statement as follows: VIRTUAL GAMING SYSTEMS Statement of Cash Flows For the Year Ended December 31, 2021 Cash Flows from Operating Activities Net Income $184,500 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense 26,000 Gain on sale of land -3,500 Decrease in accounts receivable 15,300 Increase in inventory -11,500 Decrease in prepaid rent 2,180 Decrease in accounts payable -59,500 Increase in interest payable 1,000 Decrease in income tax payable -3,300 Net cash flow from operating activities $151,180 Cash flows from investing activities Sale of land 55,000 Purchase of investment -88,000 Net cash flow from investing activities -$33,000 Cash flows from financing activities Issue of common stock 53,000 Cash dividend paid -113,000 Net cash flow from financing activities -$60,000 Net increase (decrease) in cash $58,000 Cash at the beginning of the period $206,940 Cash at the end of the period $265,120 Note: Noncash activities Purchase of equipment by issuing a note payable $23,000

Answered: VIRTUAL GAMING SYSTEMS Income Statement…

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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Question

The 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		$2,530,000
Gain on sale of land		3,500
Total revenues		2,533,500
Expenses:
Cost of goods sold	$1,615,000
Operating expenses	608,000
Depreciation expense	26,000
Interest expense	27,000
Income tax expense	73,000
Total expenses		2,349,000
Net income		$184,500

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2021	2020
Assets
Current assets:
Cash	$265,120	$206,940
Accounts receivable	71,700	87,000
Inventory	149,500	138,000
Prepaid rent	4,180	6,360
Long-term assets:
Investments	188,000	100,000
Land	211,500	263,000
Equipment	236,000	213,000
Accumulated depreciation	(132,500)	(106,500)
Total assets	$993,500	$907,800
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$31,500	$91,000
Interest payable	4,300	3,300
Income tax payable	22,200	25,500
Long-term liabilities:
Notes payable	251,000	228,000
Stockholders' equity:
Common stock	383,000	330,000
Retained earnings	301,500	230,000
Total liabilities and stockholders’ equity	$993,500	$907,800

Additional Information for 2021:

Purchase additional investment in stocks for $88,000.
Sell land costing $51,500 for $55,000, resulting in a $3,500 gain on sale of land.
Purchase $23,000 in equipment by issuing a $23,000 long-term note payable to the seller. No cash is exchanged in the transaction.
Declare and pay a cash dividend of $113,000.
Issue common stock for $53,000.

Required:

Prepare the statement of cash flows using the indirect 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

Adjustments to reconcile net income to net 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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VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2021 Net sales $2,530,000 Gain on sale of land 3,500 Total revenues 2,533,500 Expenses: Cost of goods sold $1,615,000 Operating expenses