Part 1: Ditch Diggers, Inc., comparative balance sheets for the period ending December 31, 2020 and 2019 is presented below:

2020 2019 2020 2019

Cash	$2,000	$75,000		Accounts Payable	$14,400	$800
ST Investments	3,000	5,000		Short-term Notes Payable	1,000	5,000
Accounts Receivable	30,000	90,000		Wage Payable	1,700	7,700
Allow. Doubt. Accts.	(6,000)	(9,000)		Interest Payable	9,000	3,000
Supplies	1,000	2,400		Total current	$26,100	$16,500
Inventory	10,000	73,000		Long-term Notes Payable	100,000	100,000
Total current	$40,000	$236,400		Bonds Payable	--0--	50,000
Land	70,000	60,000		Total Liabilities	$126,100	$166,500
Building & Equipment	276,000	300,000		*Common Stock $1 par	10,000	10,000
Accum. Depreciation	(51,000)	(40,000)		APIC C/S	35,000	35,000
Intangibles	75,000	80,000		APIC T/S	1,500	--0--
				Retained Earnings	248,900	438,900
				**Treasury Stock	(11,500)	(14,000)
Total Assets	$410,000	$636,400		Total Liabs. & SE	$410,000	$636,400

Note:

• *Common Stock: 50,000 shares authorized; 10,000 shares issued; 9,000 shares were outstanding as of January 1, 2020; 9,500 shares were outstanding as of December 31, 2020.

• **Treasury Stock: 1,000 shares at $5 cost January 1, 2020; 500 shares at $23 cost December 31, 2020.

Requirements: Prepare the Statement of Cash Flows using the indirect method for operations, followed by investing and financing sections. You will need to use the additional information and income statement that follows. For your convenience, pages 3 and 4 are T-accounts with beginning and ending balances posted from the balance sheet. If your ending cash balance does not reconcile, go back and evaluate the journal entries the firm would have made related to the additional information

Ditch Diggers Income Statement as of December 31, 2020:

Net Revenue		$120,000
Cost of goods sold		(90,000)
Gross Margin		$30,000
Expenses:
Bad debt	$7,000
Supplies	3,000
Depreciation	17,000
Amortization	5,000
Wages	169,000	(201,000)
Net operating income		(171,000)
Gain on sale Equipment	12,000
Loss on bond retirement	(15,000)
Interest expense	(16,000)	(19,000)
Net Income		($190,000)

Activities that occurred during the year included:

1. Short-term investments: purchased General Electric stock for $8,000. The firm also exchanged short-term investments it was holding for land. The fair market value of the stock was used to value the land (securities trade publicly). No land was sold this year (2020).

2. Ditch diggers retired 100% of its outstanding bonds payable during 2020. The bonds were purchased at face value (no discount or premium at issue). Furthermore, there were no new bonds issued during 2020.

3. The firm sold 500 shares of its treasury stock that had a $5/share cost. This is the only transaction affecting treasury stock during 2020.

4. The interest rates on the firms short-term and long-term notes payable were 12% and 5%, respectively. Given that the short-term note carries a high interest rate, the firm paid $4,000 to reduce the balance. No short-term notes payable were issued during 2020.

5. The firm purchased equipment for $26,000 cash. It also sold equipment with a cost of $50,000; net book value (NBV) $44,000.

6. No new intangibles were purchased so the decrease in the account represents the amortization of a patent that purchased several years ago.

7. No new common stock issued or retired.

Net change in cash

Beginning Cash (1/1/20)

Ending Cash (12/31/20)