MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,000 $33,750 Accounts Receivable 70,500 60,000 Inventory 30,000 24,000 Equity investments 22,250 38,500 Machinery 30,000 18,750 Buildings 67,500 56,250 Land 7,500 7,500 $269,750 $238,750 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $2,250 5,625 13,500 35,000 3,375 21,000 150,000 39,000 $269,750 $1,500 2,250 9,000 24,750 2,625 31,000 125,000 42,625 $238,750 Additional data (ignoring taxes): 1. Net income for the year was $42,500. 2. Cash dividends declared and paid during the year were $21,125. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,750. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200. Marcus's 2020 income statement follows ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income $540,000 380,000 160,000 120,450 39,550 $3,750 (800) 2,950 $42,500 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities 43425 (b) 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).) MARCUS INC. Statement of Cash Flows December 31, 2020 (Indirect Method) TCash Flows from Operating Activities T Net Income 42500 Adjustments to reconcile net income to TNet Cash Provided by Operating Activities T Depreciation Expense 8625 T Loss on Sale of Machinery 800 T Gain on Sale of Investments (3750) T Increase in Accounts Receivable (Net) (9750) T Increase in Inventory (6000) T Increase in Accrued Payables 10250 Increase in Accounts Payable 750 43425 xl