The comparative balance sheets and income statements for Gypsy Company follow:Balance SheetsAs of December 31Year 2Year 1Assets$ 16,300$ 32,5004,75011,20045,000(17,800)28,000CashAccounts receivable2,8009,80052,000(21,800)12,000InventoryEquipmentAccumulated depreciation-equipmentLandTotal assets$103,650$ 71,100Liabilities and equityAccounts payable (inventory)Long-term debt$3,750$5,80047,00047,1004,9007,80025,00033,400Common stockRetained earningsTotal liabilities and equity$103,650$ 71,100Income StatementFor the Year Ended December 31, Year 2$ 61,200(24,500)36,700(12,000)24,700Sales revenueCost of goods soldGross marginDepreciation expenseOperating incomeGain on sale of equipmentLoss on disposal of land1,500(100)$ 26,100Net incomeAdditional Data1. During Year 2, the company sold equipment for $21,500; it had originally cost $36,000. Accumulated depreciation on thisequipment was $16,000 at the time of the sale. Also, the company purchased equipment for $29,000 cash.2. 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.3. Paid dividends of $12,400. RequiredPrepare a statement of cash flows using the indirect method. (Amounts to be deducted and cash outflows should be indicated by aminus sign.)GYPSY COMPANYStatement of Cash FlowsFor the Year Ended December 31, Year 2Cash flows from operating activities:Less: Increase/Decrease in current assets and currentliabilities:Plus: Noncash charges$Cash flows from investing activities:Cash flows from financing activities:Ending cash balance$Schedule of noncash investing and financing activities:

The question is based on the concept of Cash flow statement. Cash flow statement is the statement…

The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets $ 32,500 4,750 11,200 45,000 (17,800) 28,000 $ 16,300 2,800 9,800 52,000 (21,800) 12,000 $ 71,100 Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment Land Total assets $103,650 Liabilities and equity $ 4,900 Accounts payable (inventory) Long-term debt $ 3,750 5,800 47,000 7,800 25,000 33,400 Common stock Retained earnings 47,100 Total liabilities and equity $103,650 $ 71,100

The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets $ 32,500 4,750 11,200 45,000 (17,800) 28,000 $ 16,300 2,800 9,800 52,000 (21,800) 12,000 $ 71,100 Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment Land Total assets $103,650 Liabilities and equity $ 4,900 Accounts payable (inventory) Long-term debt $ 3,750 5,800 47,000 7,800 25,000 33,400 Common stock Retained earnings 47,100 Total liabilities and equity $103,650 $ 71,100

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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