Question

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

   

VIRTUAL GAMING SYSTEMS Income Statement For the Year Ended December 31, 2018
Net sales		$	2,570,000
Gain on sale of land			5,500
Total revenues			2,575,500
Expenses:
Cost of goods sold	$ 1,635,000
Operating expenses	612,000
Depreciation expense	30,000
Interest expense	31,000
Income tax expense	77,000
Total expenses			2,385,000
Net income		$	190,500

  

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2018		2017
Assets
Current assets:
Cash	$	343,380	$	280,860
Accounts receivable		67,300		83,000
Inventory		155,500		142,000
Prepaid rent		4,420		6,840
Long-term assets:
Investments		202,000		110,000
Land		213,500		267,000
Equipment		244,000		217,000
Accumulated depreciation		(138,500)		(108,500)
Total assets	$	1,091,600	$	998,200
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	33,500	$	95,000
Interest payable		4,800		3,700
Income tax payable		23,800		27,500
Long-term liabilities:
Notes payable		259,000		232,000
Stockholders' equity:
Common stock		427,000		370,000
Retained earnings		343,500		270,000
Total liabilities and stockholders’ equity	$	1,091,600	$	998,200

  

Additional Information for 2018:

1. Purchase additional investment in stocks for $92,000.

2. Sell land costing $53,500 for $59,000, resulting in a $5,500 gain on sale of land.

3. Purchase $27,000 in equipment by borrowing $27,000 with a note payable due in three years. No cash is exchanged in the transaction.

4. Declare and pay a cash dividend of $117,000.

5. Issue common stock for $57,000.

  
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