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The statement of income and unclassified statement of financial position for Carla Vista, Inc. follow: CARLA VISTA, INC. Statement of Financial Position December 31 Assets 2021 2020 Cash $98,000 $47.100 Trading investments 129,000 113,000 Accounts receivable 77,500 40,100 Inventory 120,300 93,050 2,300 1,900 Estimated inventory returns Prepaid expenses 18,400 27,000 Equipment 322,500 299,500 Accumulated depreciation (45,000) (52,600 Total assets $723,000 $569,050 Liabilities and Shareholders' Equity Accounts payable $93,500 $71,600 Property tax payable 8,900 6,700 Refund liability 1,300 700 Bank loan payable-current portion 90,000 154,750 Bank loan payable-noncurrent portion 76,300 36,300 Common shares 210,000 180,000 Retained earnings 243,000 119,000 Total liabilities and shareholders' equity $723,000 $569,050 CARLA VISTA, INC. Statement of Income Year Ended December 31, 2021 Sales $545,900 Cost of goods sold 188,550 357,350 Gross profit Operating expenses 116,490 Income from operations 240,860 Other income and expenses $16,000 Unrealized gain on trading investments Interest expense Income before income tax (4.750) 11,250 252.110 Income tax expense 42,000 Net income $210,110 1. 2 3. 4. 4 Prepaid expenses and property tax payable relate to operating expenses. New equipment costing $85,000 was purchased for $21,800 cash and a $63,200 long-term bank loan payable. Old equipment having an original cost of $62,000 was sold for $1,800. Accounts payable relate to inventory suppliers Some of the bank loan was repaid during the year. A dividend was paid during the year. Operating expenses include $46,600 of depreciation expense and a $6,000 loss on disposal of equipment Common shares were issued for $42.000 cash during the year and some common shares were bought back and retired at the cost they were originally issued at: 5. 6 7. 8. 8. Statement of Cash Flows $ Adjustments to reconcile net income to $ C. s A > > C > w $ Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ paying $21,800 cash and issuing a $63,200 bank loan payable