Check in GL1202 - Based on Problem 12-3A LO A1, P2, P3 Drake Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. DRAKE COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 69,500 69,000 288,000 3,400 429,900 262,000 (60,000). $631,900 $ 74,700 53,000 263,000 4,300 395,000 180,000 (77,000) $ 498,000 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 58,900 17,000 75,900 105,000 180,900 $127,000 10,000 137,000 79,000 216,000 150,000 174,500 73,500 203,000 $631,900 132,000 $ 498,000 $936,000 359,000 577,000 DRAKE COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 26,000 Other expenses 213,000 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 239,000 (7,500) 330,500 58,000 $ 272,500 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,500 (details in b). b. Sold equipment costing $71,000, with accumulated depreciation of $43,000, for $20,500 cash. C. Purchased equipment costing $153,000 by paying $42,000 cash and signing a long-term note payable for the balance. d. Borrowed $7,000 cash by signing a short-term note payable. e. Paid $85,000 cash to reduce the long-term notes payable. f. Issued 4,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $201,500. DRAKE COMPANY Statement of Cash Flows (Direct Method) For Current Year Ended December 31 Cash flows from operating activities: Cash flows from investing activities: Cash paid for equipment Cash received from sale of equipment Cash flows from financing activities