The income statement and unclassified statement of financial position for Carla Vista, Inc. follow: CARLA VISTA, INC. Statement of Financial Position December 31 Assets 2018 2017 Cash $98,000 $47,100 Held for trading investments 129,000 113,000 Accounts receivable 77,500 40,100 Inventory 122,600 94,950 Prepaid expenses 18,400 27,000 Property, plant, and equipment 322,500 299,500 Accumulated depreciation (45,000 ) (52,600) Total assets $723,000 $569,050 Liabilities and Shareholders' Equity Accounts payable $93,500 $71,600 Accrued liabilities 10,200 7,400 Bank loan payable 126,300 191,050 Common shares 250,000 180,000 Retained earnings 243,000 119,000 Total liabilities and shareholders' equity $723,000 $569,050 Sales Cost of goods sold Gross profit Operating expenses CARLA VISTA, INC. Income Statement Year Ended December 31, 2018 Income from operations Other revenues and expenses $545,900 188,550 357,350 116,490 240,860 Unrealized gain on held for trading investments $16,000 Interest expense (4,750 ) 11,250 Income before income tax 252,110 Income tax expense 42,000 Net income $210,110 Additional information: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $16,000 was recorded. 3. New equipment costing $85,000 was purchased for $21,800 cash and a $63,200 long-term bank loan payable. 4. Old equipment having an original cost of $62,000 was sold for $1,800. 5. Accounts payable relate to merchandise creditors. 6. Some of the bank loan was repaid during the year. 7. A dividend was paid during the year. 8. Operating expenses include $46,600 of depreciation expense and a $6,000 loss on disposal of equipment. CARLA VISTA, INC. Statement of Cash Flows-Direct Method Year Ended December 31, 2018 Cash flows from operating activities Cash receipts from customers Cash Payments $ $ Cash receipts from customers Cash Payments A +A Repayment of bank loan payable Cash receipts from customers Purchase of land For income taxes Sale of common shares For operating expenses To suppliers Payment of cash dividends For interest Purchase of equipment Proceeds from disposal of equipment Sale of land +A $ Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ paying $21,800 cash and issuing a $63,200 bank loan payable. eTextbook and Media by