Buffalo Inc., a greeting card company, had the following statements prepared as of December 31, 2020. BUFFALO INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 12/31/20 12/31/19 Cash $6,000 $7,000 Accounts receivable 61,800 50,700 Short-term debt investments (available-for-sale) 35,300 17,900 Inventory 39,800 59,400 Prepaid rent 4,900 4,000 Equipment 153,100 130,500 Accumulated depreciation-equipment (35,000 ) (24,700 ) Copyrights 45,900 50,500 Total assets $311,800 $295,300 Accounts payable Income taxes payable Salaries and wages payable Short-term loans payable Long-term loans payable Common stock, $10 par Contributed capital, common stock Retained earnings Total liabilities & stockholders' equity $46,000 $39,700 4,000 5,900 8,100 4,100 8,100 10,100 59,900 68,600 100,000 100,000 30,000 30,000 55,700 36,900 $311,800 $295,300 BUFFALO INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 Sales revenue Cost of goods sold Gross profit Operating expenses Operating income Interest expense $11,500 Gain on sale of equipment 2,000 Income before tax Income tax expense Net income $333,125 173,600 159,525 118.900 40,625 9,500 31,125 6,225 $24,900 Additional Information: 1. Dividends in the amount of $6,100 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 $19,800 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 - signe.g. -15,000 or in parenthesis eg. (15,000).) BUFFALO INC. Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities [Net Income Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Gain on Sale of Equipment Increase in Accounts Receivable Loss on Sale of Equipment Decrease in Inventories Increase in Prepaid Rent Increase in Accounts Payable x Decrease in Income Taxes Payable Decrease in Income Taxes Payable Increase in Salaries and Wages Payable Net Cash Provided by Operating Activities v Cash Flows from Investing Activities Sale of Equipment Purchase of Equipment Net Cash Used by Investing Activities Cash Flows from Financing Activities Principal Payment on Short-term Loan [ Principal Payment on Long-term Loan Cash Flows from Financing Activities Principal Payment on Short-term Loan 3 Principal Payment on Long-term Loan Dividend payments Net Cash Used by Financing Activities Net Decrease in Cash 1000 Cash at Beginning of Period Cash at End of Period
