Assignment 6 - FALL 2020

The comparative balance sheets for 2020 and 2019and the statement of income for 2020 are given below for DenverCompany.Additional information from Denver's accounting records is provided also.

DENVERCOMPANY

Comparative Balance Sheets

December 31, 2020and 2019

($ in thousands)

20202019

Assets

Cash$33$20

Accounts receivable4850

Less: Allowance for uncollectible accounts(4)(3)

Dividends receivable32

Inventory5550

Long-term investment1510

Land7040

Buildings and equipment225250

Less: Accumulated depreciation(25)(50)

$420$369

Liabilities

Accounts payable$13$20

Salaries payable25

Interest payable42

Income tax payable78

Notes payable300

Bonds payable9570

Less: Discount on bonds(2)(3)

Shareholders' Equity

Common stock210200

Additional paid-in capital2420

Retained earnings4547

Less: Treasury stock(8)0

$420$369

DENVERCOMPANY

Income Statement

For the Year Ended December 31, 2020

($ in thousands)

Revenues

Sales revenue$200

Dividend revenue3$203

Expenses

Cost of goods sold120

Salaries expense25

Depreciation expense5

Bad debt expense1

Interest expense8

Loss on sale of building3

Income tax expense16178

Net income$25

Additional information from the accounting records:

a.A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000.

b.The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.

c.Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller.

d.New equipment was purchased for $15,000 cash.

e.On January 1, 2020, bonds were sold at their $25,000 face value.

f.On January 19, Denverissued a 5% stock dividend (1,000 shares).The market price of the $10 par value common stock was $14 per share at that time.

g.Cash dividends of $13,000 were paid to shareholders.

h.On November 12, 500 shares of common stock were repurchased as treasury stock at a cost of $8,000.

Required:

Prepare the statement of cash flows(operating, investing and financing activities)of DenverCompanyfor the year ended December 31, 2020.Present cash flows from operating activities by theindirect method