T H 9 10 Rich Corp 11 Income Statement 12 EYE 12/31/20 13 14 Revenues 2,670,000 15 Cost of Goods Sold (1,395,000) 16 Operating Expenses (663,000) 17 Interest Expense (36,000) 18 Loss on sale of equipment (6,000) (2,100,000) 19 Income before income 570,000 20 Income tax expense (195,000) 21 Net Income 375.000 22 23 Additional Information relating to 2020 activities: 24 Cash dividends of $165,000 were declared and paid 25 Equipment costing $123,000 and having a carrying value of $108,000, was sold for $ 102,000 cash 26 Equipment with a cost of $498,000 was purchased for cash 27 Operating expenses include depreciation expense of $99,000 and amortization of prepaid expenses of $6,000 28 Land was sold at its book value for cash 20 Interest expense of $36,000 was paid in cash Common stock was issued for cash 31 Inventory was purchased on credit Assume operating expenses are paid in cash 30 32 B B D E F G Debits 5 6 INDIRECT METHOD 7 38 Cash 89 Accounts Receivable 40 Inventory 41 Prepaid Insurance 42 Land 43 Buildings 44 Equipment 45 46 47 Accumulated Depreciation, 48 Accumulated Depreciation, 49 Accounts Payable 50 Bonds Payable 51 Common Stock ($1 par) 52 Retained Earnings 53 12/31/2019 111,000 78,000 0 18,000 210,000 600,000 204,000 1,221,000 Credits 12/31/2020 162,000 204,000 162,000 12,000 135,000 600,000 579,000 1,854,000 33,000 30,000 120,000 450,000 180,000 408,000 1,221,000 63,000 84,000 99,000 330,000 660,000 618,000 1,854,000 165000 54 55 56 Cash Flow Section INDIRECT method: 57 58