Refer to the data given for the Geary Company in Problem P12-4B.

Required

a. Compute the change in cash that occurred during 2019.

b. Prepare a statement of cash flows using the direct method. Use one cash outflow for "cash paid for wages and other operating expenses."

Problem P12-4B.

The Geary Company's income statement and comparative balance sheets as of December 31 of 2019 and 2018 follow:

During the year, the following transactions occurred:

1. Sold equipment for \(\$ 9,000\) cash that originally cost \(\$ 19,000\) and had \(\$ 3,000\) accumulated depreciation.

2. Sold long-term investments that had cost \(\$ 70,000\) for \(\$ 87,000\) cash. Unrealized gains totaling \(\$ 10,000\) related to these investments had been recorded in earlier years. At year-end, the fair value adjustment and unrealized gain account balances were eliminated.

3. Paid cash to extend the company's exclusive franchise for another three years.

4. Paid off a note payable at the bank on January 1.

5. Declared and paid an \(\$ 18,000\) dividend.

6. Purchased treasury stock for cash.

7. Purchased land valued at \(\$ 20,000\).

Transcribed Image Text:

GEARY COMPANY Income Statement For the Year Ended December 31, 2019 Service fees earned... Dividend and interest income.. Wages and other operating expenses Depreciation expense....... Franchise amortization expense. Loss on sale of equipment. Gain on sale of investments. Net loss..... $288,000 55,000 10,000 7,000 (17,000) $320,000 16,000 $336,000 343,000 $ (7,000)