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The comparative balance sheets and income statements for Gypsy Company follow. Balance Sheets As of December 31 Year 2 Year 1 Assets Cash $ 25,779
The comparative balance sheets and income statements for Gypsy Company follow.
Balance Sheets As of December 31 | ||||||||
Year 2 | Year 1 | |||||||
Assets | ||||||||
Cash | $ | 25,779 | $ | 2,523 | ||||
Accounts receivable | 2,158 | 1,295 | ||||||
Inventory | 6,559 | 6,149 | ||||||
Equipment | 18,948 | 43,638 | ||||||
Accumulated depreciationequipment | (7,717 | ) | (17,493 | ) | ||||
Land | 19,647 | 9,607 | ||||||
Total assets | $ | 65,374 | $ | 45,719 | ||||
Liabilities and equity | ||||||||
Accounts payable (inventory) | $ | 2,552 | $ | 4,122 | ||||
Long-term debt | 2,728 | 6,236 | ||||||
Common stock | 24,100 | 10,000 | ||||||
Retained earnings | 35,994 | 25,361 | ||||||
Total liabilities and equity | $ | 65,374 | $ | 45,719 | ||||
Income Statement For the Year Ended December 31, Year 2 | ||||
Sales revenue | $ | 39,700 | ||
Cost of goods sold | (15,735 | ) | ||
Gross margin | 23,965 | |||
Depreciation expense | (3,139 | ) | ||
Operating income | 20,826 | |||
Gain on sale of equipment | 500 | |||
Loss on disposal of land | (60 | ) | ||
Net income | $ | 21,266 | ||
Additional Data
- During Year 2, the company sold equipment for $18,785; it had originally cost $31,200. Accumulated depreciation on this equipment was $12,915 at the time of the sale. Also, the company purchased equipment for $6,510 cash.
- The company sold land that had cost $4,060. This land was sold for $4,000, resulting in the recognition of a $60 loss. Also, common stock was issued in exchange for title to land that was valued at $14,100 at the time of exchange.
- Paid dividends of $10,633.
Required Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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