Great Adventures Problem 11-1 The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below GREAT ADVENTURES, INC Income Statement For the Year Ended December 31, 2020 Revenues Service revenue (clinic, racing, TEAM) Sales revenue (MU watches) 547,000 122,000 Total revenues Expenses 669,000 Cost of goods sold (watches) Operating expenses Depreciation expense Interest expense Income tax expense 72,000 304,476 52,000 29,924 58,200 Total expenses 516,600 Net income 152,400 GREAT ADVENTURES, INC Balance Sheets December 31, 2020 and 2019 Increase (1) or Decrease (D) 2020 2019 Assets Current assets: Cash Accounts receivable Inventory Other current assets $ 327,832 $140,000 $ 48,000 17,300 13,300 37,000 14,200 11,200 187,832 (I) 11,000 (1) 3,100 () 2,100 (1) Long-term assets: Land Buildings Equipment Accumulated depreciation 300,000 1,200,000 67,000 0 0 67,000 (77,750)(25,750) 300,000 (1) 1,200,000 (I) 52,000 (I) Total assets $1,895,682 $243,650 Liabilities and Stockholders' Equity Current liabilities Accounts payable Interest payable $ 12,300 770 58,200 9,200 $ 3,100 () 19,200 (I) 482,332 (1) 770 39,000 Income tax payable Long-term liabilities Notes payable 513,332 31,000 Stockholders' Equity Common stock Paid-in capital Retained earnings Treasury stock 130,000 1,105,000 161,080 (85,000) 30,000 0 133,680 100,000 () 1,105,000 (I) 27,400 () (85,000) (I) Total liabilities and stockholders' equity $1,895,682 $243,650 Additional Information for 2020: 1. Borrowed $520,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,668 2. Issued common stock for $1,200,000 3. Purchased 10,000 shares of treasury stock for $17 per share 4. Reissued 5,000 shares of treasury stock at $18 per share 5. Declared and paid a cash dividend of $125,000 Required Prepare the statement of cash flows for the year ended December 31, 2020, using the indirect method. (List cash outflows as negative amounts.) GREAT ADVENTURES, INC Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities Net income $152,400 Adjustments to reconcile net income to net cash flows from operating activities Depreciation expense Increase in inventory Increase in other current assets Increase in accounts payable Increase in income tax payable Increase in accounts receivable 52,000 (3,100) (2,100) 3,100 19,200 (11,000) Net cash flow from operating activities $ 210,500 Cash Flows from Investing Activities Purchased treasury stock Purchase of land Purchase of buildings (85,000) (300,000) (1,200,000) Net cash flow from investing activities (1,585,000) Cash Flows from Financing Activities Issued common stock Reissued treasury stock Payment of dividends Purchased treasury stock Repayment of notes payable Issued notes payable 1,200,000 90,000 (125,000) (152,400) (37,668) 520,000 1,494,932 120,432 140,000 $ 260,432 Net cash flow from financing activities Net increase in cash Cash at the beginning of the period Cash at the end of the period
