The income statement and unclassified statement of financial position for Wildhorse, Inc. follow: WILDHORSE, INC. Statement of Financial Position December 31 Assets 2018 Cash $100,000 Held for trading investments 120,000 Accounts receivable 76,000 Inventory 122,700 Prepaid expenses 19,000 Equipment 316,000 Accumulated depreciation (47,000) Total assets $706,700 Liabilities and Shareholders' Equity Accounts payable $93,500 Accrued liabilities 12,000 Bank loan payable 131,200 Common shares 220,000 Retained earnings 250,000 Total liabilities and shareholders' equity $706,700 2017 $48,500 114,500 42,700 94,550 27,800 295,000 (53,900) $569,150 $77,200 7,100 185,850 175,000 124,000 $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: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $5,500 was recorded. 3. New equipment costing $81,000 was purchased for $21,400 cash and a $59,600 long-term bank loan payable. 4. Old equipment having an original cost of $60,000 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 $47,000 of depreciation expense and a $4,300 loss on disposal of equipment. WILDHORSE, INC. Statement of Cash Flows-Indirect Method $ Adjustments to reconcile net income to $ 4 A GA $ $