Question
The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Wright Company. Additional information from Wright's
The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for Wright Company. Additional information from Wright's accounting records is provided also. WRIGHT COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s) 2018 2017 Assets Cash $ 82 $ 45 Accounts receivable 87 90 Short-term investment 36 14 Inventory 89 85 Land 62 75 Buildings and equipment 540 430 Less: Accumulated depreciation (133 ) (90 ) $ 763 649 Liabilities Accounts payable $ 29 $ 38 Salaries payable 6 8 Interest payable 5 3 Income tax payable 8 12 Notes payable 0 22 Bonds payable 174 130 Shareholders Equity Common stock 280 230 Paid-in capitalexcess of par 140 115 Retained earnings 121 91 $ 763 $ 649 WRIGHT COMPANY Income Statement For Year Ended December 31, 2018 ($ in 000s) Revenues: Sales revenue $ 390 Expenses: Cost of goods sold $ 160 Salaries expense 46 Depreciation expense 43 Interest expense 12 Loss on sale of land 5 Income tax expense 54 320 Net income $ 70 Additional information from the accounting records: Land that originally cost $13,000 was sold for $8,000. The common stock of Microsoft Corporation was purchased for $22,000 as a short-term investment not classified as a cash equivalent. New equipment was purchased for $110,000 cash. A $22,000 note was paid at maturity on January 1. On January 1, 2018, bonds were sold at their $44,000 face value. Common stock ($50,000 par) was sold for $75,000. Net income was $70,000 and cash dividends of $40,000 were paid to shareholders.
Required: Prepare the statement of cash flows of Wright Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method.
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