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Question 1 --/4 The income statement and unclassified statement of financial position for Ivanhoe, Inc. follow: IVANHOE, INC. Statement of Financial Position December 31 Assets
Question 1
--/4
The income statement and unclassified statement of financial position for Ivanhoe, Inc. follow:
IVANHOE, INC. Statement of Financial Position December 31 | |||||||
Assets | 2018 | 2017 | |||||
Cash | $97,200 | $48,000 | |||||
Held for trading investments | 122,000 | 115,000 | |||||
Accounts receivable | 79,500 | 42,500 | |||||
Inventory | 122,500 | 95,000 | |||||
Prepaid expenses | 18,100 | 27,000 | |||||
Property, plant, and equipment | 308,000 | 284,500 | |||||
Accumulated depreciation | (47,500 | ) | (52,200 | ) | |||
Total assets | $699,800 | $559,800 | |||||
Liabilities and Shareholders Equity | |||||||
Accounts payable | $98,500 | $77,300 | |||||
Accrued liabilities | 11,200 | 7,300 | |||||
Bank loan payable | 123,100 | 194,700 | |||||
Common shares | 220,000 | 155,000 | |||||
Retained earnings | 247,000 | 125,500 | |||||
Total liabilities and shareholders equity | $699,800 | $559,800 |
IVANHOE, INC. Income Statement Year Ended December 31, 2018 | ||||||
Sales | $550,300 | |||||
Cost of goods sold | 189,450 | |||||
Gross profit | 360,850 | |||||
Operating expenses | 116,460 | |||||
Income from operations | 244,390 | |||||
Other revenues and expenses | ||||||
Unrealized gain on held for trading investments | $7,000 | |||||
Interest expense | (4,750 | ) | 2,250 | |||
Income before income tax | 246,640 | |||||
Income tax expense | 44,000 | |||||
Net income | $202,640 |
Additional information:
1. | Prepaid expenses and accrued liabilities relate to operating expenses. | |
2. | An unrealized gain on held for trading investments of $7,000 was recorded. | |
3. | New equipment costing $82,000 was purchased for $24,800 cash and a $57,200 long-term bank loan payable. | |
4. | Old equipment having an original cost of $58,500 was sold for $1,100. | |
5. | Accounts payable relate to merchandise creditors. | |
6. | Some of the bank loan was repaid during the year. | |
7. | A dividend was paid during the year. | |
8. | Operating expenses include $46,700 of depreciation expense and a $6,000 loss on disposal of equipment. |
(a) Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $24,800 cash and issuing a $57,200 bank loan payable.
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