Comparative balance sheet accounts of Ayayai Inc. are presented below. AYAYAI INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,700 $33,500 Accounts Receivable 69,800 59,400 Inventory 29,700 24,300 Equity investments 22,100 38,400 Machinery 29,900 18,500 Buildings 67,200 55,700 Land 7,600 7,600 $268,000 $237,400 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,600 Accumulated Depreciation Machinery 5,600 2,300 Accumulated Depreciation-Buildings 13,600 8,900 Accounts Payable 35.100 24,600 Accrued Payables 3.300 2,600 Long-Term Notes Payable 20.900 31,000 Common Stock, no-par 150.000 125,000 Retained Earnings 37.200 41,400 $268,000 $237,400 Additional data (ignoring taxes): 1. Net income for the year was $41.700. 2. Cash dividends declared and paid during the year were $20,900. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $25,200 were sold during the year for $29,000. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. Ayayai's 2020 income statement follows (ignoring taxes). Sales revenue $535,500 Less: Cost of goods sold 376,800 Gross margin 158,700 Less: Operating expenses (includes $8,750 depreciation and $5,666 bad debts) 120.000 Income from operations 38.700 Other: Gain on sale of investments $3,800 Loss on sale of machinery (800) 3.000 Net income $41.700 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses e.g. (45).) Net cash flow from operating activities $ (b) 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).) (b) 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 eg. (15,000).) AYAYAI INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) 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 Investments Increase in Accounts Receivable (Net) Increase in Inventory Increase in Accounts Payable Increase in Accrued Payables Increase in Accrued Payables Loss on Sale of Machinery Net Cash Provided by Operating Activities Cash Flows from Investing Activities Sale of Machinery Purchase of Machinery Addition to Buildings Sale of Investments Purchase of Investments Net Cash Used by Investing Activities Cash Flows from Financing Activities Net Cash Used by Investing Activities Cash Flows from Financing Activities Reduction in Long-term Note Payable Cash Dividends Paid Net Cash Used by Financing Activities Net Increase in Cash Cash, January 1, 2020 $ Cash. December 31, 2020
