The Extra Surplus Company's Balance Sheet for December 31, 2020 and the Income

Statement for 2021 are shown below.

Extra Surplus Company

Balance Sheet

December 31, 2021

Assets

Cash

$10,000

Accounts Receivable

5,000

Inventory

12,000

Property and Equipment, Net

20,000

$47,000

Liabilities and Stockholders' Equity

Accounts Payable

$ 10,000

Notes Payable, Long-Term

5,000

Common Stock

20,000

Retained Earnings

12,000

$ 47,000

Extra Surplus Company

Income Statement

For the Year Ended December 31, 2021

Sales

$13,000

Cost of Goods Sold

3,000

Salaries and Wage Expense

3,000

Interest Expense

1,000

Other Expenses

500

Net Income

$5,500Additional data:

Sales were $13,000; $8,000 in cash was received from customers.

Bought new land for cash, $10,000.

Sold other land for its book value of $5,000.

Paid $1,000 principal on the long-term note payable and $1,000 in interest.

Issued new shares of stock for $10,000 cash.

Cash dividends of $1,000 were declared and paid to stockholders.

Paid $5,500 on accounts payable.

No inventory purchases were made; other expenses were incurred on account.

All wages were paid in cash.

Other expenses were on account. Required:

a. Prepare a comparative balance sheet at December 31, for 2021 and 2020. Include the change from 2020 to 2021. b. Prepare the statement of cash flows using the direct method.