Question
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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