The income statement and unclassified statement of financial position for Wildhorse, Inc. follow: WILDHORSE, INC. Statement of Financial Position December 31 Assets 2018 2017 Cash $100,000 $48,500 Held for trading investments 120,000 114,500 Accounts receivable 76,000 42,700 Inventory 122,700 94,550 Prepaid expenses 19,000 27,800 Equipment 316,000 295,000 Accumulated depreciation (47,000) (53,900) Total assets $706,700 $569,150 Liabilities and Shareholders' Equity Accounts payable $93,500 $77,200 Accrued liabilities 12,000 7,100 Bank loan payable 131,200 185,850 Common shares 220,000 175,000 Retained earnings 250,000 124,000 Total liabilities and shareholders' equity $706,700 $569,150 WILDHORSE, INC. Income Statement Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other revenues and expenses Unrealized gain on held for trading investments $5,500 Interest expense (4,720) Income before income tax Income tax expense Net income $536,000 186,900 349,100 116,400 232,700 780 233,480 45,000 $188,480 Additional information: Additional information: 1. 2. 3. 4. 5. Prepaid expenses and accrued liabilities relate to operating expenses. An unrealized gain on held for trading investments of $5,500 was recorded. New equipment costing $81,000 was purchased for $21,400 cash and a $59,600 long-term bank loan payable. Old equipment having an original cost of $60,000 was sold for $1,800. Accounts payable relate to merchandise creditors. Some of the bank loan was repaid during the year. A dividend was paid during the year. Operating expenses include $47,000 of depreciation expense and a $4,300 loss on disposal of equipment. 6. 7. 8. (a) Prepare the statement of cash flows, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Adjustments to reconcile net income to + Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $21,400 cash and issuing a $59,600 bank loan payable