Reliable Inc.’s Comparative Balance Sheets for 2021 and 2020 and Income Statement for 2021 are presented below.
Reliable Inc.
Comparative Balance Sheets
December 31, 2008 and 2007
($ in 000s)
Assets 2021 2020
Cash $ 600 $ 375
Accounts Receivable 600 450
Inventory 900 525
Land 675 600
Building 900 900
Less: Accum. Depreciation (300) (270)
Equipment 2,850 2,250
Less: Accum. Depreciation (525) (480)
Patent 1,200 1,500
$6,900 $5,850
Liabilities
Accounts Payable $ 750 $ 450
Accrued Expenses Payable 300 225
Note Payable—Land 150 0
Stockholders’ Equity
Common Stock 3,150 3,000
Paid-In Capital in Excess of Par 750 675
Retained Earnings 1,800 1,500
$6,900 $ 5,850
`
Reliable Inc.
Income Statement
For Year Ended December 31, 2021
($ in 000s)
Sales Revenue $2,645
Less: Cost of Goods Sold 600
Gross Profit $2,045
Operating Expenses 1,145
Income from Operations $ 900
Plus Gain on Sale of Land 90
Less Loss on Sale of Equipment 15
Net Income $ 975
Additional information from the accounting records:
During 2021 equipment with a cost of $300 (90% depreciated) was sold.
The statement of retained earnings reveals reductions for both stock and cash dividends. The stock dividends were $225.
Operating expenses include depreciation and amortization.
Instructions:
Prepare the Statement of Cash Flows using the direct method.
Reconcile Net Income to Cash.