Exercise 23-14 

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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 depreciationequipment

(35,000

)(25,000

)Copyrights

46,000

50,000

Total assets

$313,000

$295,000

Accounts payable

$46,000

$40,000

Income taxes payable

4,000

6,000

Salaries and wages payable

8,000

4,000

Short-term loans payable

8,000

10,000

Long-term loans payable

60,000

69,000

Common stock, $10 par

100,000

100,000

Contributed capital, common stock

30,000

30,000

Retained earnings

57,000

36,000

Total liabilities & stockholders' equity

$313,000

$295,000

BRECKER INC.

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2020

Sales revenue

$338,150

Cost of goods sold

175,000

Gross profit

163,150

Operating expenses

120,000

Operating income

43,150

Interest expense

$11,400

Gain on sale of equipment

2,000

9,400

Income before tax

33,750

Income tax expense

6,750

Net income

$27,000

Additional information:

1.Dividends in the amount of $6,000were 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 $20,000and 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 - sign e.g. -15,000 or in parenthesis e.g. (15,000).)