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Prepare a statement of cash flows for 2020, using the Direct Method. The following are the comparative balance sheets and an income statement for Innovation
Prepare a statement of cash flows for 2020, using the Direct Method.
The following are the comparative balance sheets and an income statement for Innovation Company Innovation Company Balance Sheets as December 31 2020 2019 Assets Cash $21.500 $120.000 Accounts Receivable 195.000 105.000 Inventory 180,000 225.000 Long-term investment 0 60.000 Totals S396,500 5510,000 Liabilities and shareholders equity Accounts payable Operating expenses payable Bonds payable Common Stock Retain Earnings Totals $75,000 $120,000 24,000 15,000 70,000 100,000 125.000 125,000 102.500 150.000 S396,500 5510,000 Innovation Company Income Statement For the Year Ended December 31, 2020 Sales S560.000 Beginning Inventory $225.000 Purchases 330.000 Goods Available for Sale 555,000 Less: ending inventory 180,000 Cost of good sold 375.000 Gross profit 185.000 Operating expenses 180,000 Income form operations 5,000 Other expenses Loss on sale of long-term investment (7.500) Net loss (2.500) Additional information: Cash dividends of $45,000 were paid in year 2020. Required: Prepare a statement of cash flows for 2020, using the direct method Step by Step Solution
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