FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The comparative balance sheets and income statements for Gypsy Company follow.

Balance Sheets
As of December 31
  Year 2 Year 1
Assets    
Cash $22,225 $2,960
Accounts receivable 1,625 975
Inventory 6,305 5,911
Equipment 18,020 41,800
Accumulated depreciation—equipment (7,059) (16,483)
Land 19,286 9,656
Total assets $60,402 $44,819
Liabilities and equity    
Accounts payable (inventory) $2,494 $4,029
Long-term debt 2,649 6,055
Common stock 22,300 9,500
Retained earnings 32,959 25,235
Total liabilities and equity $60,402 $44,819

 

Income Statement
For the Year Ended December 31, Year 2
Sales revenue $31,260
Cost of goods sold (12,390)
Gross margin 18,870
Depreciation expense (3,901)
Operating income 14,969
Gain on sale of equipment 550
Loss on disposal of land (70)
Net income $15,449


Additional Data

During Year 2, the company sold equipment for $18,225; it had originally cost $31,000. Accumulated depreciation on this equipment was $13,325 at the time of the sale. Also, the company purchased equipment for $7,220 cash.

The company sold land that had cost $3,170. This land was sold for $3,100, resulting in the recognition of a $70 loss. Also, common stock was issued in exchange for title to land that was valued at $12,800 at the time of exchange.

Paid dividends of $7,725.


Required
Prepare a statement of cash flows using the indirect method. (Cash outflows should be indicated with a minus sign.)
  

Cash flows from operating activities:
Less: Increases in current assets and decreases in current liabilities:
Plus: Noncash charges
Cash flows from investing activities:
GYPSY COMPANY
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash flows from financing activities:
Ending cash balance
Schedule of noncash investing and financing activities:
S
$
0
0
0
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Transcribed Image Text:Cash flows from operating activities: Less: Increases in current assets and decreases in current liabilities: Plus: Noncash charges Cash flows from investing activities: GYPSY COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from financing activities: Ending cash balance Schedule of noncash investing and financing activities: S $ 0 0 0
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