The comparative balance sheets and income statements for Gypsy Company follow. B
ID: 2580034 • Letter: T
Question
The comparative balance sheets and income statements for Gypsy Company follow. Balance Sheets As of December 31 2222 1,333 66 6,194 8.420 15,827) 84331051 62.716 $47.059 Lablates and equty $2082 4,332 Accounts payable (inventory Long-term debt 23,100 100 Retained eamings Total abes and equity 562796 47.059 Cost of goods soid Gross margin Depreciation expeie (3,707) Operating income Oain on sale of equipment on disposal o 180) 18,929 Additional Data During 2017, the company sold equipment for $18,036; it had originally cost $28,400 Accumulated depreciation on this equipment was $11,114 at the time of the sale. Also, the company purchased equipment for $6,710 cash. 2 The company sold land that had cost $3,680. This land was sold for $3,600, resulting in the recognition of a $80 loss. Also, common stock was issued in exchange for title to land that was valued at $11,600 at the time of exchange. 3 Paid dividends of $9.465 Required Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)Explanation / Answer
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
18,929
Add: Non Cash and Non Operating Expenses
Loss on sale of Land
80
Depreciation
3,707
Less: Non Cash and Non Operating Income
Gain on sale of Equipment
(750)
Operating profit before Working Capital changes
21,966
Add: Increase in Current Liabilities And decrease in Current Assets
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Trade Receivables
(889)
Increase in Inventories
(413)
Decrease in Trade payables
(1650)
Cash Flow from Operating Activities (A)
19,014
Cash Flow from Investing Activities
Sale of Equipment
18,036
Purchase of Equipment
(6,710)
Sale of Land
3,600
Cash Flow from Investing Activities (B)
14,926
Cash Flow from Financing Activities
Repayment of Long term debt
(3,757)
Dividend Paid
(9,465)
Cash Used in Financing Activities ( C )
(13,221)
Increase in Cash Flow (A+B+C)
20718
Opening Cash
`
2786
Closing Cash
23504
Equipment A/c
Particulars
In $
Particulars
In $
To Bal. b/d
42,060
By Bank
18,036
By Acc. Dep.
11,114
To P&L (gain on Sale)
750
To Cash
6,710
By bal. c/d
20,370
Total
49,520
Total
49,520
Acc. Depreciation Equipment A/c
Particulars
In $
Particulars
In $
To Equipment
11,114
To Bal. b/d
15,827
By P&L (Current year)
3,707
By bal. c/d
8,420
Total
19,534
Total
19,534
Land A/c
Particulars
In $
Particulars
In $
To Bal. b/d
10,513
By Bank
3,600
By P&L (Loss)
80
To Common Stock
11,600
By bal. c/d
18,433
Total
22,113
Total
22,113
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Details
Net
Cash Flow from Operating Activities
Net Profit before tax
18,929
Add: Non Cash and Non Operating Expenses
Loss on sale of Land
80
Depreciation
3,707
Less: Non Cash and Non Operating Income
Gain on sale of Equipment
(750)
Operating profit before Working Capital changes
21,966
Add: Increase in Current Liabilities And decrease in Current Assets
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Trade Receivables
(889)
Increase in Inventories
(413)
Decrease in Trade payables
(1650)
Cash Flow from Operating Activities (A)
19,014
Cash Flow from Investing Activities
Sale of Equipment
18,036
Purchase of Equipment
(6,710)
Sale of Land
3,600
Cash Flow from Investing Activities (B)
14,926
Cash Flow from Financing Activities
Repayment of Long term debt
(3,757)
Dividend Paid
(9,465)
Cash Used in Financing Activities ( C )
(13,221)
Increase in Cash Flow (A+B+C)
20718
Opening Cash
`
2786
Closing Cash
23504