Communication Accessories

Income Statement

For the Year Ended December 31, 2018

Revenues

$2,800,000

Gain on sale of land

4,000

Total revenues

2,804,000

Expenses:

Cost of goods sold

1,900,000

Operating expenses

575,000

Depreciation expense

38,000

Interest expense

16,000

Income tax expense

63,000

Total expenses

2,592,000

Net Income

$212,000

Communication Accessories

Balance Sheets

December 31

Assets

2018

2017

Current Assets:

Cash

$182,000

$187,000

Accounts receivable

83,000

95,000

Inventory

121,000

138,000

Prepaid rent

7,000

5,000

Long-Term Assets:

Investment in stock

195,000

100,000

Land

230,000

260,000

Equipment

305,000

225,000

Accumulated depreciation

(138,000)

(100,000)

Total Assets

$985,000

$910,000

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable

$40,000

$58,000

Interest payable

1,000

2,000

Income tax payable

12,000

10,000

Long-Term Liabilities:

Notes payable

285,000

205,000

Stockholders' Equity:

Common stock

350,000

350,000

Retained earnings

297,000

285,000

Total Liabilities and Equity

$985,000

$910,000

Additional Information for 2018:

1. Purchase additional investment in stocks for $95,000.

2. Sell land costing $30,000 for $34,000 resulting in a $4,000 gain on sale of land.

3. Purchase $80,000 in equipment by borrowing $80,000 with a note payable due in three years. No cash is exchanged in the transaction.

4. The company declares and pays a cash dividend of $200,000.

Required:

Prepare the statement of cash flows using theindirectmethod. Disclose any noncash transactions in an accompanying footnote.