Exercise 23-14 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 depreciation equipment (35,000) (25,000 ) Copyrights 46,000 50,000 Total assets $313,000 $295,000 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 4,000 8,000 8,000 60,000 100,000 30,000 57,000 $313,000 $40,000 6,000 4,000 10,000 69,000 100,000 30,000 36,000 $295,000 BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 Sales revenue Cost of goods sold Gross profit Operating expenses Operating income Interest expense $11,400 Gain on sale of equipment 2,000 Income before tax Income tax expense Net income $338,150 175,000 163,150 120,000 43,150 9,400 33,750 6,750 $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. BRECKER INC. Statement of Cash Flows Adjustments to reconcile net income to