Question 1 View Policies Current Attempt in Progress The income statement and unclassified statement of financial position for Carla Vista, Inc. follow: CARLA VISTA, INC. Statement of Financial Position December 31 Assets 2018 Cash $98,000 Held for trading investments 129,000 Accounts receivable 77,500 Inventory 122,600 Prepaid expenses 18,400 Property, plant, and equipment 322,500 Accumulated depreciation (45,000) Total assets $723,000 Liabilities and Shareholders' Equity Accounts payable $93,500 Accrued liabilities 10,200 Bank loan payable 126,300 Common shares 250,000 Retained earnings 243,000 Total liabilities and shareholders' equity $723,000 2017 $47,100 113,000 40,100 94,950 27,000 299,500 (52,600) $569,050 $71,600 7,400 191,050 180,000 119,000 $569,050 CARLA VISTA, INC. Income Statement Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other revenues and expenses Unrealized gain on held for trading investments $16,000 Interest expense (4,750) Income before income tax Income tax expense Net income $545,900 188,550 357,350 116,490 240,860 11,250 252,110 42,000 $210,110 Additional information: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $16,000 was recorded. 3. New equipment costing $85,000 was purchased for $21,800 cash and a $63,200 long-term bank loan payable. 4. Old equipment having an original cost of $62,000 was sold for $1,800. 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 $46,600 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).) (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).) CARLA VISTA, INC. Statement of Cash Flows-Direct Method Year Ended December 31, 2018 - Cash flows from operating activities Cash receipts from customers Cash Payments For operating expenses Sale of land Purchase of equipment Proceeds from disposal of equipment For income taxes Repayment of bank loan payable Sale of common shares Payment of cash dividends To suppliers Purchase of land For interest Cash receipts from customers