The comparative balance sheets and income statements for Zachary Company follow: Balance Sheets As of December 31 Year 2 Year 1 Assets Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment Land Total assets Liabilities and equity Accounts payable (inventory) Long-term debt Common stock Retained earnings Total liabilities and equity $ 22,350 1,830 6,197 18,288 (9,728) 18,966 $ 57,903 $ 2,994 1,098 5,810 40,318 (17,518) 10,306 $ 43,008 $ 2,531 2,944 24,500 27,928 $ 57,903 $ 4,089 6,730 12,000 20, 189 $ 43,008 Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 30,420 Cost of goods sold (12,057) Gross margin 18,363 Depreciation expense (3,495) Operating income 14,868 Gain on sale of equipment 650 Loss on disposal of land (40) Net income $ 15,478 Additional Data 1. During Year 2, the company sold equipment for $18,165; it had originally cost $28,800. Accumulated depreciation on this equipment was $11,285 at the time of the sale. Also, the company purchased equipment for $6,770 cash. 2. The company sold land that had cost $3,840. This land was sold for $3,800, resulting in the recognition of a $40 loss. Also, common stock was issued in exchange for title to land that was valued at $12,500 at the time of exchange. 3. Paid dividends of $7,739. ZACHARY COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities: Net income $ 15,478 Less: Increase/Decrease in current assets and current liabilities: Increase in accounts receivable Decrease in accounts payable Plus: Noncash charges Depreciation expense $ 15,478 Cash flows from investing activities: Proceeds from sale of land Cash flows from financing activities: Paid for dividends Net cash outflow from financing activities Net increase in cash Plus: Beginning cash balance Ending cash balance Schedule of noncash investing and financing activities: 15,478 2,994 18,472 $