Reference no: EM133090733
Question - Walnut Company has provided selected financial statements for the two years 2020 and 2021. The company's fiscal year ends on December 31.
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2021
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2020
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|
Cash
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$34,000
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$10,000
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Accounts Receivable
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27,000
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25,000
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|
Inventory
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30,000
|
35,000
|
|
Long-term Investment in shares
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26,000
|
20,000
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|
Land
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29,000
|
38,000
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|
Machinery
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92,000
|
90,000
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Less: Accumulated Amortization
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(18,000)
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(15,000)
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Total Assets
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$220,000
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$203,000
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|
Accounts payable
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$28,000
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$36,000
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Income taxes payable
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8,000
|
15,000
|
|
Notes payable (Long-term)
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48,000
|
45,000
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Share capital
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100,000
|
75,000
|
|
Retained earnings
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36,000
|
32,000
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Total Liabilities and Shareholders' Equity
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$220,000
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$203,000
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A summary income statement for the year ended December 31, 2021 follows:
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Revenue
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$192,000
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Cost of goods sold
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(78,000)
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Gross profit
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114,000
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Operating expenses (includes $7,000 amortization expense)
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(58,000)
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Gain on sale of long-term investment
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5,000
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|
Loss on sale of machinery
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(7,000)
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Income before income taxes
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54,000
|
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Income tax expense
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(11,000)
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|
Net income
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$43,000
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Additional information (transactions occurred during 2021):
Old machinery was sold at a loss of $7,000
New machinery of $25,000 was purchased by using the cash proceeds from issuing shares.
Some long-term investments were sold for cash at gain of $5,000. $15,000 worth of new long-term investments were purchased using cash during 2021.
Dividends were declared and paid during 2021.
Additional notes were issued for cash.
Vacant land was sold for cash.
Accounts payable relates solely to purchases of merchandise inventory.
Required - Prepare cash flow statement using indirect and direct method?