The income statement, balance sheets, and additional information for Virtual Gam
ID: 2591442 • Letter: T
Question
The income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.
Additional Information for 2018:
1. Purchase additional investment in stocks for $89,000.
2. Sell land costing $52,000 for $56,000, resulting in a $4,000 gain on sale of land.
3. Purchase $24,000 in equipment by borrowing $24,000 with a note payable due in three years. No cash is exchanged in the transaction.
4. Declare and pay a cash dividend of $114,000.
5. Issue common stock for $54,000.
Required:
Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)
VIRTUAL GAMING SYSTEMSIncome Statement
For the Year Ended December 31, 2018 Net sales $ 2,540,000 Gain on sale of land 4,000 Total revenues 2,544,000 Expenses: Cost of goods sold $ 1,620,000 Operating expenses 609,000 Depreciation expense 27,000 Interest expense 28,000 Income tax expense 74,000 Total expenses 2,358,000 Net income $ 186,000
Explanation / Answer
Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)
Cash flow from operating activity Net income 186000 Adjustment to reconcile net income Depreciation 27000 Gain on sale of land (4000) Decrease account receivable 15400 Increase inventory (12000) Decrease prepaid rent 2240 Decrease account payable (60000) Increase interest payable 1100 Decrease income tax payable (3400) Net cash flow from operating activity 152340 Cash flow from investing activity Sale of land 56000 Purchase investment (89000) Net cash flow from investing activity (33000) Cash flow from financing activity Issue common stock 54000 Dividend paid (114000) Net cash flow from financing activity (60000) Net cash flow 59340 Beginning cash 217920 Ending cash 277260Related Questions
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