Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Instant Brake Inc.'s comparative balance sheet information at December 31, 2020 and 2019, and its income statement for the year ended December 31, 2020, are
Instant Brake Inc.'s comparative balance sheet information at December 31, 2020 and 2019, and its income statement for the year ended December 31, 2020, are as follows: Instant Brake Inc. Income Statement December 31, 2020 Sales Cost of goods sold $883,000 569, 000 Gross profit $314,000 Operating expenses $132,650 Depreciation expense 41, 210 173, 860 Operating Profit 140, 140 Loss on sale of equipment 13, 260 Investment income 20, 020 Profit before taxes. 146, 900 Income taxes Profit 19,000 $127,900 Instant Brake Inc. Balance Sheet Information December 31 2020 2019 Net Change Cash Cash equivalents $ 41,000 $ 23,560 $ 17,440 25, 780 8, 200 17, 580 Accounts receivable 86, 920 30, 440 56, 480 Inventory 112,840 76, 520 36, 320 Investment 0 25, 780 (25, 780) Land 75, 400 75, 400 0 Building and equipment 415, 110 435, 130 (20, 020) Accumulated depreciation 111,080 89, 960 21, 120 Accounts payable Dividends payable Bonds payable 10, 650 2, 200 17,000 36, 400 1, 300 (25,750) 900 17,000 Preferred shares 80, 200 Common shares 404, 680 Retained earnings 131, 240 80, 200 404, 680 62, 490 0 0 68, 750 During 2020, the following transactions occurred: 1. Purchased equipment for $20,900 cash. 2. Sold the investment on January 1, 2020, for $45,800, resulting in investment income of $20,020. 3. Sold equipment for $7,570 cash that had originally cost $40,920 and had $20,090 of accumulated depreciation. 4. Issued $17,000 of bonds payable at face value. Other information: a. All sales are credit sales. b. All credits to accounts receivable in the period are receipts from customers. c. All purchases of merchandise are on credit. d. All debits to accounts payable in the period result from payments for merchandise. e. Other operating expenses are cash expenses. f. Income taxes are cash expenses. Required: Prepare a statement of cash flows for 2020 using the direct method to report cash inflows and outflows from operating activities. (List any deduction in cash and cash outflows as negative amounts.) INSTANT BRAKE INC. Statement of Cash Flows For Year Ended December 31, 2020 Cash flows from operating activities: $ 0 Cash flows from investing activities: 0 Cash flows from financing activities: 0 0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started