4 1 Note: To complete the assignment, go to the worksheet tab labeled Cash Flow 2 and complete the statement of cash flows. 3 INNOVATION ELECTRONICS, INC. Income Statement 6 For the Year Ended December 31, 20X2 7 Net sales $ 2,430,000 Gain on sale of land 6,500 5 8 9 2,436,500 10 Total revenues 11 12 Expenses: 13 Cost of goods sold 14 Operating expenses 15 Depreciation expense 16 Interest expense 17 Income tax expense 18 19 Total expenses 20 21 Net income $ 1,565,000 598,000 16,000 17,000 63,000 2,259,000 $ 177,500 D A B 1 Note: To complete the assignment, go to the worksheet tab labeled Cash Flow 2 and complete the statement of cash flows. 3 Note: Additional information is included at the bottom of the statement. 4 INNOVATION ELECTRONICS, INC. 5 Balance Sheet 6 At December 31 7 20X2 20X1 8 Assets 9 Current assets: 10 Cash $ 184,420 $ 25,740 11 Accounts receivable 68,700 83,000 12 Inventory 134,500 128,000 13 Prepaid insurance 2,980 4,560 14 Long-term assets: 15 Investments 211,000 120,000 16 Land 208,500 255,000 17 Equipment 203,000 203,000 18 Accumulated depreciation (117,500) (101,500) 19 20 Total assets $ 895,600 $ 717,800 21 22 23 24 25 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 26,500 $ 81,000 20 Total assets $ 895,600 $ 717,800 21 22 23 Liabilities and Stockholders' Equity 24 Current liabilities: 25 Accounts payable $ 26,500 $ 81,000 26 Interest payable 3,400 2,300 27 Income tax payable 30,200 32,500 28 Long-term liabilities: 29 Notes payable 255,000 242,000 30 Stockholders' equity: 31 Common stock 273,000 230,000 32 Retained earnings 307,500 130,000 33 34 Total liabilities and stockholders' equity $ 895,600 $ 717,800 35 36 Additional Information for 20X2: 37 1. Assume that all increases and decreases in long term assets, long term liabilities, 38 and common stock are a result of cash transactions. 39 2. Land costing $46,500 was sold, resulting in a gain of $6,500. No other 40 long-term assets were sold. 41 3. Additional long-term investments were purchased. 42 4. An additional long-term note payable was signed. No repayments on 43 notes were made. 44 5. Additional common stock was issued. B D E 8 1 Required: 2 Complete the statement of cash flows (indirect method) shown below by using formulas that reference 3 data from the income statement and balance sheet (found by clicking the tabs at the bottom of this 4 worksheet. Note: Blank cells may be included in calculations. 5 6 INNOVATION ELECTRONICS, INC. 7 Statement of Cash Flows For the Year Ended December 31, 20X2 9 Cash Flows from Operating Activities: 10 Net income 11 Adjustments to reconcile net income to net cash 12 provided by operating activities: 13 Depreciation expense 14 Gain (on sale of land) 15 Changes in current assets and current liabilities: 16 Accounts receivable 17 Inventory 18 Prepaid insurance 19 Accounts payable 20 Interest payable 21 Income tax payable 22 Net cash provided by (used in) operating activities 23 24 Cash Flows from Investing Activities: B D 14 Gain (on sale of land) 15 Changes in current assets and current liabilities: 16 Accounts receivable 17 Inventory 18 Prepaid insurance 19 Accounts payable 20 Interest payable 21 Income tax payable 22 Net cash provided by (used in) operating activities 23 24 Cash Flows from Investing Activities: 25 Purchase investments 26 Sale of land 27 Net cash provided by (used in) investing activities 28 29 Cash Flows from Financing Activities: 30 Issue common stock 31 Issue long term note 32 Net cash provided by (used in) financing activities 33 Net increase (decrease) in cash 34 Cash at beginning of the period 35 Cash at end of the period 36