Question
he income statement, balance sheets, and additional information for Virtual Gaming Systems are provided. VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31,
he income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.
VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2021 | ||||||||
Net sales | $ | 2,450,000 | ||||||
Gain on sale of land | 7,500 | |||||||
Total revenues | 2,457,500 | |||||||
Expenses: | ||||||||
Cost of goods sold | $ | 1,575,000 | ||||||
Operating expenses | 600,000 | |||||||
Depreciation expense | 18,000 | |||||||
Interest expense | 19,000 | |||||||
Income tax expense | 65,000 | |||||||
Total expenses | 2,277,000 | |||||||
Net income | $ | 180,500 | ||||||
VIRTUAL GAMING SYSTEMS Balance Sheets December 31 | ||||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 139,400 | $ | 81,700 | ||||
Accounts receivable | 70,500 | 85,000 | ||||||
Inventory | 137,500 | 130,000 | ||||||
Prepaid rent | 3,100 | 4,800 | ||||||
Long-term assets: | ||||||||
Investments | 180,000 | 100,000 | ||||||
Land | 205,500 | 253,000 | ||||||
Equipment | 220,000 | 205,000 | ||||||
Accumulated depreciation | (120,500 | ) | (102,500 | ) | ||||
Total assets | $ | 835,500 | $ | 757,000 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 27,500 | $ | 83,000 | ||||
Interest payable | 3,500 | 2,500 | ||||||
Income tax payable | 29,000 | 31,500 | ||||||
Long-term liabilities: | ||||||||
Notes payable | 255,000 | 240,000 | ||||||
Stockholders' equity: | ||||||||
Common stock | 295,000 | 250,000 | ||||||
Retained earnings | 225,500 | 150,000 | ||||||
Total liabilities and stockholders equity | $ | 835,500 | $ | 757,000 | ||||
Additional Information for 2021:
-
Purchase additional investment in stocks for $80,000.
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Sell land costing $47,500 for $55,000, resulting in a $7,500 gain on sale of land.
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Purchase $15,000 in equipment by issuing a $15,000 long-term note payable to the seller. No cash is exchanged in the transaction.
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Declare and pay a cash dividend of $105,000.
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Issue common stock for $45,000.
Required:
Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)
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