Question

Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIES Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) 2021 2020 Assets Cash $ 520 $ 225 Accounts receivable 630 330 Inventory 780 420 Land 550 540 Building 700 700 Less: Accumulated depreciation (300 ) (280) Equipment 3,200 2,990 Less: Accumulated depreciation (439 ) (400 ) Patent 1,400 1,500 $ 7,041 $ 6,025 Liabilities Accounts payable $ 880 $ 630 Accrued liabilities 290 240 Lease liability—land 130 0 Shareholders' Equity Common stock 3,600 3,500 Paid-in capital—excess of par 550 430 Retained earnings 1,591 1,225 $ 7,041 $ 6,025 METAGROBOLIZE INDUSTRIES Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues Sales revenue $ 3,078 Gain on sale of land 60 $ 3,138 Expenses Cost of goods sold $ 1,080 Depreciation expense—building 20 Depreciation expense—equipment 552 Loss on sale of equipment 25 Amortization of patent 100 Operating expenses 400 2,177 Net income $ 961 Additional information from the accounting records: Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2021. During 2021, equipment with a cost of $570,000 (90% depreciated) was sold. The statement of shareholders' equity reveals reductions of $220,000 and $375,000 for stock dividends and cash dividends, respectively.

Answer 1

Answer

Amount ref 2,778 W.N.1 2,778 (1,190) (350) W.N.2 W.N.3 (1,540) 1,238 Statement of cash flows Direct Method Statement of cash Flow Cash Flows from Operating Activities Cash Inflows: From customers Total Receipts Cash outflows: To Suppliers of goods For Operating expenses Total Payments Net cash from (used in) operating activities Cash flows from investing activities Purchase of Equipment Proceeds from sale of land (net) Sale of Equipment Net cash from (used in) investing activities Cash flows from financing activities Cash Proceeds from issuance of common stock Annual Lease payment Payment of Dividends Net cash from (used in) financing activities Net increase (decrease) in cash Cash balance Jan 1 Cash balance Dec 31 WN 6 (630) 50 32 WN 6 (548) WN 6 (20) (375) WN 11 (395) 295 225 520 Notes Non-cash investing and financing activities Assets acquired on finance lease 130

330 W.N.1 Cash receipts from customers Opening Accounts Receivable less unearned revenue Sales Closing Balance Accounts Receivable less unearned revenue Cash receipts from customers 3,078 (630) put in negative 2,778 420 W.N.2 Cash paid to suppliers Opening Inventory Closing Stock COGS Purchase COGS Closing Inventory-opening Inventory 780 1,080 1,440 Accounts payable Opening Balance Purchases Closing Balance Payments-(Opening Accounts Payable+Purchases-Closing Balance of Accounts Payable) Payments 630 1,440 880 1,190 240 (net of prepaid, if any) 400 Salary and other operating exp 290 (net of prepaid, if any) 350 1.225 W.N.3 Expense payable Including salary payable Expense Payable + salary payable Less Prepaid Opening Balance Expense for the year less Depreciation expense Closing Balance Payments=[Opening Payable+Expense-Closing Balance) Payments W.N.4 Retained Earnings Opening Balance Net Income Less: Dividend Declared Ending Balance WN 6 Asset Sold Equipment Cost Acc Dep of Asset Sold WDV of assets sold Loss in sale of equipment Proceeds from Sale Total Proceeds from Sale 961 plug-in (595) 1,591 570 (513) 57 (25) 32 32 Opening Acc Dep Add: Dep expense Less: Acc Dep on Asset Sold Ending Acc Dep 400 552 (513) 39 4 2,990 (570) 150 630 plug-in 3,200 - 630 Equipment Beginning Less: Sold Add: Asset acquired on finance lease Add: Purchase Ending Proceeds from Issue of note payable Cash pald WN 7 Common Stock+Paid in Capital Beginning Ending Issue of Shares for conversion of Bonds Cash Proceeds from Issuance of common stock Stock Dividend Cash Proceeds WN 11 Dividend Payable Beginning Balance Declared during the year Stock Dividend Paid Ending Balance 3.930 4,150 220 220 595 (220) (375)