Problem 13 - B Spinach Company Statement of Cash Flows Balance Sheet Cash Accounts receivable Inventory Prepaid expenses Long-term investments Plant and equipment Accumulated depreciation Total assets December 31, Year 2 Year 1 8 15 17 10 20 11 2 43 50 90 65 50 (30) 125 130 Accounts payable Accrued liabilities Income taxes payable Bonds payable (due in 18 years) Common stock Retained earnings Total liabilities and owners' equity 11 13 6 15 55 30 130 15 12 3 20 50 25 125 Income Statement Sales Less cost of goods sold Gross margin Less operating expenses Net operating income Gain on sale of investments Loss on sale of equipment Less income tax expense Net Income 400 (280) 120 (90) 30 2 (1) (8) 23 Notes: a) Investments that cost $7 were sold for $9. b) Equipment that cost $15 and had Accumulated Depreciation of $10 was sold for $4. c) The company paid a cash dividend. Problem 13 - B Spinach Company Statement of Cash Flows Balance Sheet Cash Accounts receivable Inventory Prepaid expenses Long-term investments Plant and equipment Accumulated depreciation Total assets December 31, Year 2 Year 1 8 15 17 10 20 11 2 43 50 90 65 50 (30) 125 130 Accounts payable Accrued liabilities Income taxes payable Bonds payable (due in 18 years) Common stock Retained earnings Total liabilities and owners' equity 11 13 6 15 55 30 130 15 12 3 20 50 25 125 Income Statement Sales Less cost of goods sold Gross margin Less operating expenses Net operating income Gain on sale of investments Loss on sale of equipment Less income tax expense Net Income 400 (280) 120 (90) 30 2 (1) (8) 23 Notes: a) Investments that cost $7 were sold for $9. b) Equipment that cost $15 and had Accumulated Depreciation of $10 was sold for $4. c) The company paid a cash dividend