Concept explainers
Preparing statement of
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, 2018 |
|||||
Net sales | $2,600,000 | ||||
Gain on sale of land | 7,000 | ||||
Total revenues Expenses: | 2,607,000 | ||||
Cost of goods sold | $1,650,000 | ||||
Operating expenses | 615,000 | ||||
33,000 | |||||
Interest expense | 34,000 | ||||
Income tax expense | 80,000 | ||||
Total expenses | 2,412,000 | ||||
Net income | $ 195,000 | ||||
VIRTUAL GAMING SYSTEMS Balance Sheets December 31 | |||||
2018 | 2017 | ||||
Assets Current assets: |
|||||
Cash | $ 409,500 | $ 343,800 | |||
Accounts receivable | 64,000 | 80,000 | |||
Inventory | 160,000 | 145,000 | |||
Prepaid rent | 4,600 | 7,200 | |||
Long-term assets: | |||||
Investments | 205,000 | 110,000 | |||
Land | 215,000 | 270,000 | |||
Equipment | 250,000 | 220,000 | |||
(143,000) | (110,000) | ||||
Total assets | $1,165,100 | $1,066,000 | |||
Liabilities and Stockholders’ Equity Current liabilities: |
|||||
Accounts payable | $ 35,000 | $ 98,000 | |||
Interest payable | 5,100 | 4,000 | |||
Income tax payable | 25,000 | 29,000 | |||
Long-term liabilities: | |||||
Notes payable | 265,000 | 235,000 | |||
Stockholders’ equity: | |||||
Common stock | 460,000 | 400,000 | |||
375,000 | 300,000 | ||||
Total liabilities and stockholders’ equity | $1,165,100 | $1,066,000 |
Additional Information for 2018:
1. Purchase additional investment in stocks for $95,000.
2. Sell land costing $55,000 for $62,000, resulting in a $7,000 gain on sale of land.
3. Purchase $30,000 in equipment by borrowing $30,000 with a note payable due in three years. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $120,000.
5. Issue common stock for $60,000.
Required:
Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note.
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Financial Accounting
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