FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The comparative balance sheets and income statements for Gypsy Company follow:
Balance Sheets
As of December 31
Year 2
Year 1
Assets
$ 16,300
$ 32,500
4,750
11,200
45,000
(17,800)
28,000
Cash
Accounts receivable
2,800
9,800
52,000
(21,800)
12,000
Inventory
Equipment
Accumulated depreciation-equipment
Land
Total assets
$103,650
$ 71,100
Liabilities and equity
Accounts payable (inventory)
Long-term debt
$
3,750
$
5,800
47,000
47,100
4,900
7,800
25,000
33,400
Common stock
Retained earnings
Total liabilities and equity
$103,650
$ 71,100
Income Statement
For the Year Ended December 31, Year 2
$ 61,200
(24,500)
36,700
(12,000)
24,700
Sales revenue
Cost of goods sold
Gross margin
Depreciation expense
Operating income
Gain on sale of equipment
Loss on disposal of land
1,500
(100)
$ 26,100
Net income
Additional Data
1. 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. 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.
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Transcribed Image Text:The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets $ 16,300 $ 32,500 4,750 11,200 45,000 (17,800) 28,000 Cash Accounts receivable 2,800 9,800 52,000 (21,800) 12,000 Inventory Equipment Accumulated depreciation-equipment Land Total assets $103,650 $ 71,100 Liabilities and equity Accounts payable (inventory) Long-term debt $ 3,750 $ 5,800 47,000 47,100 4,900 7,800 25,000 33,400 Common stock Retained earnings Total liabilities and equity $103,650 $ 71,100 Income Statement For the Year Ended December 31, Year 2 $ 61,200 (24,500) 36,700 (12,000) 24,700 Sales revenue Cost of goods sold Gross margin Depreciation expense Operating income Gain on sale of equipment Loss on disposal of land 1,500 (100) $ 26,100 Net income Additional Data 1. 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. 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.
Required
Prepare a statement of cash flows using the indirect method. (Amounts to be deducted and cash outflows should be indicated by a
minus sign.)
GYPSY COMPANY
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash flows from operating activities:
Less: Increase/Decrease in current assets and current
liabilities:
Plus: Noncash charges
$
Cash flows from investing activities:
Cash flows from financing activities:
Ending cash balance
$
Schedule of noncash investing and financing activities:
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Transcribed Image Text:Required Prepare a statement of cash flows using the indirect method. (Amounts to be deducted and cash outflows should be indicated by a minus sign.) GYPSY COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Less: Increase/Decrease in current assets and current liabilities: Plus: Noncash charges $ Cash flows from investing activities: Cash flows from financing activities: Ending cash balance $ Schedule of noncash investing and financing activities:
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