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Problem 23-04 Sarasota Company had the following information available at the end of 2020. SARASOTA COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2020 AND

Problem 23-04

Sarasota Company had the following information available at the end of 2020.

SARASOTACOMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2020 AND 2019

2020

2019

Cash

$10,060

$4,000

Accounts receivable

20,520

12,890

Short-term investments

22,080

30,280

Inventory

41,830

34,940

Prepaid rent

3,020

11,990

Prepaid insurance

2,100

91

Supplies

1,000

75

Land

124,360

174,960

Buildings

349,270

349,270

Accumulated depreciationbuildings

(105,830

)

(87,870

)

Equipment

530,150

397,390

Accumulated depreciationequipment

(131,220

)

(112,770

)

Patents

45,430

49,870

Total assets

$912,770

$865,116

Accounts payable

$22,060

$31,980

Income taxes payable

5,000

4,000

Salaries and wages payable

4,960

2,980

Short-term notes payable

9,920

9,920

Long-term notes payable

59,540

69,710

Bonds payable

403,870

403,870

Premium on bonds payable

19,410

20,646

Common stock

239,730

221,960

Paid-in capital in excess of parcommon stock

25,160

17,490

Retained earnings

123,120

82,560

Total liabilities and stockholders equity

$912,770

$865,116

SARASOTA COMPANY INCOME STATEMENT AND DIVIDEND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2020

Sales revenue

$1,167,020

Cost of goods sold

750,580

416,440

Gross margin
Operating expenses
Selling expenses

$79,080

Administrative expenses

158,020

Depreciation/Amortization expense

40,850

Total operating expenses

277,950

Income from operations

138,490

Other revenues/expenses
Gain on sale of land

8,020

Gain on sale of short-term investment

3,960

Dividend revenue

2,390

Interest expense

(52,260

)

(37,890

)

Income before taxes

100,600

Income tax expense

39,110

Net income

61,490

Dividends to common stockholders

(20,930

)

To retained earnings

$40,560

Prepare a statement of cash flows for Sarasota Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for-sale. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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