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The income statement, balance sheets, and additional information for Great Adventures, Inc., are provided below.
| GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020 |
| Revenues: | | |
| Service revenue (clinic, racing, TEAM) | $ 555,000 | |
| Sales revenue (MU watches) | 130,000 | |
| | | |
| Total revenues | | $ 685,000 |
| Expenses: | | |
| Cost of goods sold (watches) | 76,000 | |
| Operating expenses | 304,876 | |
| Depreciation expense | 56,000 | |
| Interest expense | 30,324 | |
| Income tax expense | 60,600 | |
| | | |
| Total expenses | | 527,800 |
| | | |
| Net income | | $ 157,200 |
| | | |
| |
| GREAT ADVENTURES, INC. Balance Sheets December 31, 2020 and 2019 |
| | 2020 | | 2019 | | Increase (I) or Decrease (D) |
| Assets | | | | | | | | | |
| Current assets: | | | | | | | | | |
| Cash | $ | 313,784 | | $ | 144,000 | | $ | 169,784 | (I) |
| Accounts receivable | | 54,000 | | | 41,000 | | | 13,000 | (I) |
| Inventory | | 17,900 | | | 14,600 | | | 3,300 | (I) |
| Other current assets | | 13,900 | | | 11,600 | | | 2,300 | (I) |
| Long-term assets: | | | | | | | | | |
| Land | | 600,000 | | | 0 | | | 600,000 | (I) |
| Buildings | | 1,000,000 | | | 0 | | | 1,000,000 | (I) |
| Equipment | | 71,000 | | | 71,000 | | | | |
| Accumulated depreciation | | (82,750) | | | (26,750) | | | 56,000 | (I) |
| | | | | | | | | | |
| Total assets | $ | 1,987,834 | | $ | 255,450 | | | | |
| | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | |
| Current liabilities: | | | | | | | | | |
| Accounts payable | $ | 12,900 | | $ | 9,600 | | $ | 3,300 | (I) |
| Interest payable | | 810 | | | 810 | | | | |
| Income tax payable | | 60,600 | | | 41,000 | | | 19,600 | (I) |
| Long-term liabilities: | | | | | | | | | |
| Notes payable | | 555,284 | | | 33,000 | | | 522,284 | (I) |
| Stockholders' Equity: | | | | | | | | | |
| Common stock | | 120,000 | | | 20,000 | | | 100,000 | (I) |
| Paid-in capital | | 1,105,000 | | | 0 | | | 1,105,000 | (I) |
| Retained earnings | | 193,240 | | | 151,040 | | | 42,200 | (I) |
| Treasury stock | | (60,000) | | | 0 | | | (60,000) | (I) |
| | | | | | | | | | |
| Total liabilities and stockholders equity | $ | 1,987,834 | | $ | 255,450 | | | | |
| | | | | | | | | | |
| |
Additional Information for 2020:
1. Borrowed $560,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,716.
2. Issued common stock for $1,200,000.
3. Purchased 10,000 shares of treasury stock for $12 per share.
4. Reissued 5,000 shares of treasury stock at $13 per share.
5. Declared and paid a cash dividend of $115,000.
Required:
Prepare the statement of cash flows for the year ended December 31, 2020, using the indirectmethod. (List cash outflows as negative amounts.)
Answer & Explanation
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