Question

he income statement, balance sheets, and additional information for Virtual Gaming Systems are provided.

VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2021
Net sales					$	2,450,000
Gain on sale of land						7,500
Total revenues						2,457,500
Expenses:
Cost of goods sold	$	1,575,000
Operating expenses		600,000
Depreciation expense		18,000
Interest expense		19,000
Income tax expense		65,000
Total expenses						2,277,000
Net income					$	180,500

  

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2021				2020
Assets
Current assets:
Cash	$	139,400			$	81,700
Accounts receivable		70,500				85,000
Inventory		137,500				130,000
Prepaid rent		3,100				4,800
Long-term assets:
Investments		180,000				100,000
Land		205,500				253,000
Equipment		220,000				205,000
Accumulated depreciation		(120,500	)			(102,500	)
Total assets	$	835,500			$	757,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	27,500			$	83,000
Interest payable		3,500				2,500
Income tax payable		29,000				31,500
Long-term liabilities:
Notes payable		255,000				240,000
Stockholders' equity:
Common stock		295,000				250,000
Retained earnings		225,500				150,000
Total liabilities and stockholders’ equity	$	835,500			$	757,000

  

Additional Information for 2021:

1. Purchase additional investment in stocks for $80,000.

2. Sell land costing $47,500 for $55,000, resulting in a $7,500 gain on sale of land.

3. Purchase $15,000 in equipment by issuing a $15,000 long-term note payable to the seller. No cash is exchanged in the transaction.

4. Declare and pay a cash dividend of $105,000.

5. Issue common stock for $45,000.

  
Required:

Prepare the statement of cash flows using the indirect method. Disclose any noncash transactions in an accompanying note. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.