USA: +1 (725) 712-1730 
Sign in
Swasey Company provided the following partial comparative balance sheets and the income statement for 20X2.
Question not attempted.
| Swasey Company |
| Comparative Balance Sheets |
| At December 31, 20X1 and 20X2 |
| 1 | 20X1 | 20X2 | |
| 2 | Current assets: | ||
| 3 | Cash | $234,500.00 | $672,000.00 |
| 4 | Accounts receivable | $747,000.00 | $585,000.00 |
| 5 | Inventories | 296,000.00 | 318,000.00 |
| 6 | Long-term assets: | ||
| 7 | Plant and equipment | 2,202,000.00 | 2,140,000.00 |
| 8 | Accumulated depreciation | (1,202,000.00) | (1,270,000.00) |
| 9 | Land | 991,000.00 | 1,437,500.00 |
| 10 | Total assets | $3,268,500.00 | $3,882,500.00 |
| 11 | Current liabilities: | ||
| 12 | Wages payable | $699,000.00 | $514,000.00 |
| 13 | Long-term liabilities: | ||
| 14 | Bonds payable | 0.00 | 384,500.00 |
| 15 | Mortgage payable | 96,500.00 | 0.00 |
| 16 | Total liabilities | $795,500.00 | $898,500.00 |
| 17 | Stockholders’ equity: | ||
| 18 | Common stock | 380,000.00 | 380,000.00 |
| 19 | Paid-in capital in excess of par | 276,000.00 | 276,000.00 |
| 20 | Retained earnings | 1,817,000.00 | 2,328,000.00 |
| 21 | Total stockholders’ equity | 2,473,000.00 | 2,984,000.00 |
| 22 | Total liabilities and stockholders’ equity | $3,268,500.00 | $3,882,500.00 |
Question not attempted.
| Swasey Company |
| Income Statement |
| For the Year Ended December 31, 20X2 |
| 1 | Revenues | $3,010,000.00 |
| 2 | Gain on sale of equipment | 104,000.00 |
| 3 | Cost of goods sold | (1,918,000.00) |
| 4 | Depreciation expense | (276,000.00) |
| 5 | Interest expense | (12,500.00) |
| 6 | Net income | $907,500.00 |
During the year, Swasey Company sold equipment with a book value of $279,000 for $383,000 (original purchase cost of $487,000). New equipment was purchased.
| Required: | |
| 1. | Prepare a statement of cash flows for Swasey for 20X2. |
| 2. | Reflect on the relationship between the statement of cash flows and the change in cash. |
Expert Answer
Answer 1.
Purchase of Equipment = Ending Equipment + Cost of Equipment Sold – Beginning Equipment
Purchase of Equipment = $2,140,000 + $487,000 – $2,202,000
Purchase of Equipment = $425,000
Cash Dividend = Beginning Retained Earnings + Net Income – Ending Retained Earnings
Cash Dividend = $1,817,000 + $907,500 – $2,328,000
Cash Dividend = $396,500
