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Instant Brake Inc.'s comparative balance sheet Information at December 31, 2020 and 2019, and Its Income statement fo ended December 31, 2020, are as follows:
Instant Brake Inc.'s comparative balance sheet Information at December 31, 2020 and 2019, and Its Income statement fo ended December 31, 2020, are as follows: Instant Brake Inc. Income Statement December 31, 2020 Sales $879,000 Cost of goods sold 579,000 Gross profit $300,000 Operating expenses $132,750 Depreciation expense 41,310 174,060 Operating Profit 125,940 Loss on sale of equipment 5,460 Investment income 13,020 Profit before taxes 133,500 Income taxes 21,000 Profit $112,500 Instant Brake Inc. Balance Sheet Information December 31 2020 2019 Net Change Cash Cash equivalents $ 51,000 $ 25,560 $ 25,440 18,780 10,200 8,580 Accounts receivable 88,920 40,440 48,480 Inventory 114,840 86,520 28,320 Investment 18,780 (18,780) Land 77,400 77,400 Building and equipment 449,310 462,330 (13,020) Accumulated depreciation 124,080 102,960 Accounts payable 17,250 38,400 21,120 (21,150) Dividends payable 1,800 900 900 Bonds payable 27,000 27,000 Preferred shares 82,200 82,200 Common shares 406,680 406,680 0 Retained earnings 141,240 90,090 51,150 During 2020, the following transactions occurred: 1. Purchased equipment for $19,500 cash. 2. Sold the Investment on January 1, 2020, for $31,800, resulting in Investment Income of $13,020. 3. Sold equipment for $6,870 cash that had originally cost $32,520 and had $20,190 of accumulated depreciation. 4. Issued $27,000 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: Cash flows from investing activities: Cash flows from financing activities
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