GREAT ADVENTURES, INC. Income Statement For the Year Ended December 31, 2020 Service revenue (clinic, racing, TEAM) Sales revenue (MU watches) $ 553,000 128,000 Total revenues $ 681,000 Cost of goods sold (watches) Operating expenses Depreciation expense Interest expense Income tax expense 75,000 304,776 55,000 30,224 60,000 Total expenses 525,000 Net income $156,000 GREAT ADVENTURES, INC. Balance Sheets December 31, 2020 and 2019 Increase (1) 2019 Decrease (D) Current assets: $ 286,046 $143,000 $ 143,046 () 12,500 () 3,250 () 2,250 () Accounts receivable 52,500 17,750 13,750 40,000 14,500 11,500 Other current assets Long-term assets: Buildings Equipment 400,000 1,200,000 70,000 400,000 () 1,200,000 () 70,000 (81,500 (26,500) $1,958,546 $252,500 55,000 (1) Total assets Liabilities and Stockholders' Equity Current liabilities: $ 12,750 9,500 S Accounts payable Interest payable Income tax payable 3,250 () 19,500 () 512,296 () 60,000 40,500 32,500 30,000 139,200 Long-term liabilities: Notes payable 544,796 Stockholders' Equity Common stock Paid-in capital Retained earnings Treasury stock 130,000 1,105,000 170,200 (65,000) 100,000 (1) 1,105,000 (1) 31,000 (I) (65,000) (I) Total liabilities and stockholders' equity $1,958,546 $252,500 Additional Information for 2020: 1. Borrowed $550,000 in January 2020. Made 12 monthly payments during the year, reducing the balance of the loan by $37,704 2. Issued common stock for $1,200,000. 3. Purchased 10,000 shares of treasury stock for $13 per share. 4. Reissued 5,000 shares of treasury stock at $14 per share. 5. Declared and paid a cash dividend of S125,000. Required Prepare the statement of cash flows for the year ended December 31, 2020, using the indirect method. (List cash outflows as negative amounts.) REAT ADVENTUR Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation expense Increase in accounts receivable Increase in inventory Increase in other current assets Increase in accounts payable Increase in income tax payable Net cash flow from operating activities Cash Flows from Investing Activities Purchase of land Purchase of buildings Decrease in inventory Net cash flow from investing activities Cash Flows from Financing Activities Issued common stock Issued notes payable Purchased treasury stock Reissued treasury stock Payment of dividends Repayment of notes payable Net cash flow from financing activities Cash at the beginning of the period Cash at the end of the period