Refer to the information in Problem 16-3A. Prepare a statement of cash flows for 2020 using the direct method to report cash inflows and outflows from operating activities.

Other information:

a. All sales are credit sales.

b. All credits to accounts receivable in the period are receipts from customers.

c. All purchases of merchandise are on credit.

d. All debits to accounts payable in the period result from payments for merchandise.

e. Other operating expenses are cash expenses.

f. Income taxes are cash expenses.

Problem 16-3A

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Instant Brake Inc. Instant Brake Inc. Income Statement Balance Sheet Information December 31, 2020 December 31 Net Sales.. 885,000 2020 2019 Change Cost of goods sold. 568,000 Cash. $ 40,000 $ 23,360 $ 16,640 Gross profit. 317,000 Cash equivalents. 26,280 8,000 18,280 Operating expenses.. 132,640 Accounts receivable. 86,720 29,440 57,280 Depreciation expense 41,200 173,840 Inventory . 112,640 75,520 37,120 Operating profit. 143,160 Investment. -0- 26,280 (26,280) Loss on sale of equipment, 13,820 Land. 75,200 75,200 -0- Investment income. 20,520 Building and equipment. 412,400 432,920 (20,520) Profit before taxes.. 149,860 Accumulated depreciation. 110,080 88,960 21,120 Income taxes.. 20,000 Accounts payable. 10,040 36,200 (26,160) Profit. 129,860 Dividends payable. 2,400 1,400 1,000 Bonds payable . 16,000 -0- 16,000 Preferred shares. 80,000 80,000 -0- Common shares 404,480 404,480 -0- Retained earnings.. 130,240 59,680 70,560