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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,
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 $877,000 Cost of goods sold 578,000 Gross profit $299,000 Operating expenses $132,740 Depreciation expense 41,300 174,040 Operating Profit 124,960 Loss on sale of equipment 4,920 Investment income 12,520 Profit before taxes 132,560 Income taxes 20,000 Profit $112,560 Instant Brake Inc. Balance Sheet Information December 31 Cash 2020 $ 50,000 2019 Net Change $25,360 $ 24,640 Cash equivalents Accounts receivable 18,200 88,720 10,000 8,280 39,440 49,280 Inventory 114,640 85,520 29,120 Investment 10,200 (18,280) Land 77,200 77,200 Building and equipment 448,200 460,720 Accumulated depreciation. 123,080 101,960 Accounts payable 17,640 38,200 (12,520) 21,120 (20,560) Dividends payable 1,600 800 Bonds payable 26,000 800 26,000 Preferred shares 82,000 Common shares 406,480 82,000 406,480 Betained earnings 140,240 87,080 53,160 During 2020, the following transactions occurred: 1. Purchased equipment for $19,400 cash. 2. Sold the investment on January 1, 2020, for $30,800, resulting in investment income of $12,520. 3. Sold equipment for $6,820 cash that had originally cost $31,920 and had $20,180 of accumulated depreciation. 4. Issued $26,000 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: Cash flows from financing activities:
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