The comparative balance sheets and income statements for Gypsy Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 32,500 $ 16,300 Accounts receivable 4,750 2,800 Inventory 11,200 9,800 Equipment 45,000 52,000 Accumulated depreciation—equipment (17,800 ) (21,800 ) Land 28,000 12,000 Total assets $ 103,650 $ 71,100 Liabilities and equity Accounts payable (inventory) $ 3,750 $ 4,900 Long-term debt 5,800 7,800 Common stock 47,000 25,000 Retained earnings 47,100 33,400 Total liabilities and equity $ 103,650 $ 71,100 Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 61,200 Cost of goods sold (24,500) Gross margin 36,700 Depreciation expense (12,000) Operating income 24,700 Gain on sale of equipment 1,500 Loss on disposal of land (100) Net income $ 26,100 Additional Data 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. 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. Required Prepare a statement of cash flows using the indirect method (don’t forget the supplementary noncash activities shown after the statement).
The comparative balance sheets and income statements for Gypsy Company follow:
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Balance Sheets |
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Year 2 |
|
Year 1 |
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Assets |
|
|
|
|
|
|
|
|
|
Cash |
$ |
32,500 |
|
|
$ |
16,300 |
|
|
|
Accounts receivable |
|
4,750 |
|
|
|
2,800 |
|
|
|
Inventory |
|
11,200 |
|
|
|
9,800 |
|
|
|
Equipment |
|
45,000 |
|
|
|
52,000 |
|
|
|
|
|
(17,800 |
) |
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|
(21,800 |
) |
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|
Land |
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28,000 |
|
|
|
12,000 |
|
|
|
Total assets |
$ |
103,650 |
|
|
$ |
71,100 |
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
Accounts payable (inventory) |
$ |
3,750 |
|
|
$ |
4,900 |
|
|
|
Long-term debt |
|
5,800 |
|
|
|
7,800 |
|
|
|
Common stock |
|
47,000 |
|
|
|
25,000 |
|
|
|
|
|
47,100 |
|
|
|
33,400 |
|
|
|
Total liabilities and equity |
$ |
103,650 |
|
|
$ |
71,100 |
|
|
|
Income Statement |
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|
Sales revenue |
$ |
61,200 |
|
|
|
Cost of goods sold |
|
(24,500) |
|
|
|
Gross margin |
|
36,700 |
|
|
|
Depreciation expense |
|
(12,000) |
|
|
|
Operating income |
|
24,700 |
|
|
|
Gain on sale of equipment |
|
1,500 |
|
|
|
Loss on disposal of land |
|
(100) |
|
|
|
Net income |
$ |
26,100 |
|
|
Additional Data
- 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.
- 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.
Required
Prepare a statement of
Cash flow statement is helpful for the stakeholders that they can identify the organization's financial situation that they have a sufficient amount of cash for out their obligation. It can be repaired using direct and indirect methods.
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