Comparative balance sheet accounts of Teal Inc. are presented below. TEAL INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,600 $33,600 Accounts Receivable 70,400 60,600 Inventory 30,000 24,200 Equity investments 22,100 38,200 Machinery 29,900 18,800 Buildings 67,800 56.900 Land 7,500 7.500 $269,300 $239,800 Credit Accounts Allowance for Doubtful Accounts $2.200 $1,500 Accumulated Depreciation--Machinery 5.700 2,200 Accumulated Depreciation-Buildings 13,700 9,100 Accounts Payable 35,000 25,000 Accrued Payables 3.300 2,600 20,800 31,300 Long-Term Notes Payable Common Stock, no-par 150,000 125.000 Retained Earnings 38,600 43,100 $269,300 $239,800 Additional data (ignoring taxes); 1. 2. 3. Net income for the year was $41,600. Cash dividends declared and paid during the year were $21,100. 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 $24.900 were sold during the year for $28.700. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2.150. 4 Teal's 2020 income statement follows (ignoring taxes). Equity investments (level of ownership is less than 20%) that cost $24.900 were sold during the year for $28,700. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2.150. Teal's 2020 income statement follows (ignoring taxes). Sales revenue $541.900 381.900 160.000 121,400 Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,850 depreciation and $5,127 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income 38.600 $3,800 (800) 3.000 $41.600 (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 es. (451) Net cash flow from operating activities 43650 (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with ef In parenthesis eg. (15,000).) TEAL INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) Cash Flows from Operating Activities Net Income $ 41600 Adjustments to reconcile net income to Cash Flows from Operating Activities Depreciation Expense $ 8850 Gain on Sale of Investments 5127 Increase in Accounts Receivable (Net) 700 Decrease in Inventory - 14927 -8800 2150 3650 -8800 2150 -3650 > -21100 - 10500 -31600 > 8000 33600 41600
