Question
Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2020. BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31,
Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2020.
BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 | ||||||
---|---|---|---|---|---|---|
12/31/20 | 12/31/19 | |||||
Cash | $6,000 | $7,000 | ||||
Accounts receivable | 62,000 | 51,000 | ||||
Short-term debt investments (available-for-sale) | 35,000 | 18,000 | ||||
Inventory | 40,000 | 60,000 | ||||
Prepaid rent | 5,000 | 4,000 | ||||
Equipment | 154,000 | 130,000 | ||||
Accumulated depreciationequipment | (35,000 | ) | (25,000 | ) | ||
Copyrights | 46,000 | 50,000 | ||||
Total assets | $313,000 | $295,000 | ||||
Accounts payable | $46,000 | $40,000 | ||||
Income taxes payable | 4,000 | 6,000 | ||||
Salaries and wages payable | 8,000 | 4,000 | ||||
Short-term loans payable | 8,000 | 10,000 | ||||
Long-term loans payable | 60,000 | 69,000 | ||||
Common stock, $10 par | 100,000 | 100,000 | ||||
Contributed capital, common stock | 30,000 | 30,000 | ||||
Retained earnings | 57,000 | 36,000 | ||||
Total liabilities & stockholders equity | $313,000 | $295,000 |
BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 | ||||
---|---|---|---|---|
Sales revenue | $338,150 | |||
Cost of goods sold | 175,000 | |||
Gross profit | 163,150 | |||
Operating expenses | 120,000 | |||
Operating income | 43,150 | |||
Interest expense | $11,400 | |||
Gain on sale of equipment | 2,000 | 9,400 | ||
Income before tax | 33,750 | |||
Income tax expense | 6,750 | |||
Net income | $27,000 |
Additional information:
1. | Dividends in the amount of $6,000 were declared and paid during 2020. | |
2. | Depreciation expense and amortization expense are included in operating expenses. | |
3. | No unrealized gains or losses have occurred on the investments during the year. | |
4. | Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2020. |
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started