Comparative balance sheet accounts of Buffalo Inc. are presented below. BUFFALO INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,200 $33,900 Accounts Receivable 71,100 59,600 Inventory 30,000 23,800 Equity investments 22,400 38,400 Machinery 30,200 18,600 Buildings 67,000 56,000 Land 7,500 7,500 $270,400 $237,800 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $2,300 5,600 13,400 34,800 3,400 20,900 150,000 40,000 $270,400 $1,600 2,200 9,100 24,600 2,600 31,200 125,000 41,500 $237,800 Additional data (ignoring taxes): 1. 2. 3. Net income for the year was $44,400. Cash dividends declared and paid during the year were $20,900. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. Equity investments (level of ownership is less than 20%) that cost $25,100 were sold during the year for $28,100. No unrealized gains and losses were recorded on these investments in 2020. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. 4. 5. Buffalo's 2020 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,450 depreciation and $5,327 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income $544,300 381,900 162,400 120.200 42,200 $3,000 (800) 2,200 $44,400 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Net cash flow from operating activities $ $ 44650 (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).) BUFFALO INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) Cash Flows from Operating Activities Net Income $ 44400 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Increase in Accounts Receivable (Net) Gain on Sale of Investments - 11300 Loss on Sale of Machinery -1000 Increase in Accounts Payable