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GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020 |
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| Revenues: | ||
| Service revenue (clinic, racing, TEAM) | $ 533,000 | |
| Sales revenue (MU watches) | 108,000 | |
| Total revenues | $ 641,000 | |
| Expenses: | ||
| Cost of goods sold (watches) | 65,000 | |
| Operating expenses | 303,776 | |
| Depreciation expense | 45,000 | |
| Interest expense | 29,224 | |
| Income tax expense | 54,000 | |
| Total expenses | 497,000 | |
| Net income | $ 144,000 | |
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GREAT ADVENTURES, INC. Balance Sheets December 31, 2020 and 2019 |
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| 2020 | 2019 |
Increase (I) or Decrease (D) |
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| Assets | |||||||||
| Current assets: | |||||||||
| Cash | $ | 289,666 | $ | 133,000 | $ | 156,666 | (I) | ||
| Accounts receivable | 37,500 | 30,000 | 7,500 | (I) | |||||
| Inventory | 16,250 | 13,500 | 2,750 | (I) | |||||
| Other current assets | 12,250 | 10,500 | 1,750 | (I) | |||||
| Long-term assets: | |||||||||
| Land | 450,000 | 0 | 450,000 | (I) | |||||
| Buildings | 1,000,000 | 0 | 1,000,000 | (I) | |||||
| Equipment | 60,000 | 60,000 | |||||||
| Accumulated depreciation | (69,000) | (24,000) | 45,000 | (I) | |||||
| Total assets | $ | 1,796,666 | $ | 223,000 | |||||
| Liabilities and Stockholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 11,250 | $ | 8,500 | $ | 2,750 | (I) | ||
| Interest payable | 700 | 700 | |||||||
| Income tax payable | 54,000 | 35,500 | 18,500 | (I) | |||||
| Long-term liabilities: | |||||||||
| Notes payable | 439,916 | 27,500 | 412,416 | (I) | |||||
| Stockholders' Equity: | |||||||||
| Common stock | 120,000 | 20,000 | 100,000 | (I) | |||||
| Paid-in capital | 1,106,000 | 0 | 1,106,000 | (I) | |||||
| Retained earnings | 160,800 | 130,800 | 30,000 | (I) | |||||
| Treasury stock | (96,000) | 0 | (96,000) | (I) | |||||
| Total liabilities and stockholders’ equity | $ | 1,796,666 | $ | 223,000 | |||||
Additional Information for 2020:
1. Borrowed $450,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,584.
2. Issued common stock for $1,200,000.
3. Purchased 12,000 shares of treasury stock for $16 per share.
4. Reissued 6,000 shares of treasury stock at $17 per share.
5. Declared and paid a cash dividend of $114,000.
Required:
Prepare the statement of cash flows for the year ended December 31, 2020, using the indirect method
| Statement of Cash Flow | ||
| Particulars | Amount | Total Amount |
| Income | 144,000.00 | |
| Depreciation | 45,000.00 | |
| Increase in AR | (7,500.00) | |
| Increase in inventory | (2,750.00) | |
| Increase in Other current assets | (1,750.00) | |
| Increase in AP | 2,750.00 | |
| Increase in income tax payable | 18,500.00 | |
| Cash flow from operating activities | 198,250.00 | |
| Cash flow from Investing activities | ||
| Purchase of Land | (450,000.00) | |
| Purchase of Building | (1,000,000.00) | |
| Sale of PPE | ||
| Cash flow from Investing activities | (1,450,000.00) | |
| Cash flow from Financing activities | ||
| Issue of Stock | 100,000.00 | |
| Issue of paid in capital | 1,106,000.00 | |
| Issue of notes payable | 450,000.00 | |
| Repayment of notes | (37,584.00) | |
| Purchase of treasury stock = 12000*16 | (96,000.00) | |
| Dividends Paid | (114,000.00) | |
| Cash flow from Financing activities | 1,408,416.00 | |
| net change in cash and cash equivalents | 156,666.00 | |
| Opening cash and cash equivalents | 133,000.00 | |
| Closing cash and cash equivalents | 289,666.00 |
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