Prepare a statement of cash flows using the indirect method:

Comparative balance sheet accounts of Sarasota Inc. are presented below. SARASOTA INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,900 $33,600 Accounts Receivable 70,600 60,500 Inventory 29,900 24,000 Equity investments 22,100 38,800 30,300 18,700 Machinery Buildings 66,900 56,500 Land 7,600 7,600 $269,300 $239,700 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 5,600 2,200 Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable 13,700 9,000 35,300 24,700 3,400 2,600 Accrued Payables Long-Term Notes Payable 20,800 31,200 Common Stock, no-par 150,000 125,000 Retained Earnings 38,300 43,500 $269,300 $239,700 Additional data (ignoring taxes): 1. 2. 3. Net income for the year was $40,700. Cash dividends declared and paid during the year were $20,900. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. Equity investments (level of ownership is less than 20%) that cost $24,900 were sold during the year for $28,600. No unrealized gains and losses were recorded on these investments in 2020. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. 4. 5. Sarasota's 2020 income statement follows (ignoring taxes). Sales revenue $535,200 Less: Cost of goods sold 377,900 Gross margin 157,300 119,500 Less: Operating expenses (includes $8,850 depreciation and $5,817 bad debts) Income from operations Other: Gain on sale of investments 37,800 $3,700 Loss on sale of machinery (800) 2,900 Net income $40,700 SARASOTA INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) Cash Flows from Operating Activities Net Income $ $ 40,700 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense $ 8,850 Gain on Sale of Investments 3,700 Loss on Sale of Machinery 800 Increase in Accounts Receivable (Net) 9,400 Increase in Inventory 5,900 Increase in Accounts Payable 10,600 Increase in Accrued Payables 800 2,050 Net Cash Provided by Operating Activities 42,750 Cash Flows from Investing Activities Purchase of Investments 8,200 Addition to Buildings 10,400 Purchase of Machinery 15,400 Sale of Investments 28,600 Sale of Machinery 2,250 Net Cash Used by Investing Activities 3,150 Cash Flows from Financing Activities Reduction in Long-term Note Payable v 10,400 Cash Dividends Paid 20,900 Net Cash Used by Financing Activities 31,300 Net Increase in Cash 8,300 Cash, January 1, 2020 33,600 Cash, December 31, 2020 $ 41,900