Problem 23-06 Your answer is partially correct. Try again. Comparative balance sheet accounts of Culver Inc. are presented below. CULVER INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,200 $33,900 Accounts Receivable 71,100 60,200 Inventory 30,100 24,100 Equity investments 22,500 38,700 Machinery 29,900 18,900 Buildings 67,800 56,400 Land 7,600 7,600 $271,200 $239,800 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $2,200 5,700 13,600 34,700 3,500 21,100 150,000 40,400 $271,200 $1,500 2,300 9,000 24,500 2,600 30,700 125,000 44,200 $239,800 Additional data (ignoring taxes): 1. Net income for the year was $42,500. 2. Cash dividends declared and paid during the year were $21,300. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 3. 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 $24,800 were sold during the year for $28,600. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250. Culver's 2020 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,750 depreciation and $5,691 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income $538,000 377,700 160,300 120,800 39,500 $3,800 (800) 3,000 $42,500 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) CULVER INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) TCash Flows from Operating Activities T Net Income 42500 Adjustments to reconcile net income to I Net Cash Provided by Operating Activities Net Cash Provided by Operating Activities Depreciation Expense I 8750 Gain on Sale of Investments , (3800) T Loss on Sale of Machinery 800 Increase in Accounts Receivable (Net) (10900) T (6000) Increase in Inventory Increase in Accounts Payable Increase in Accrued Payables 10200 A A 900 Net Cash Provided by Operating Activities T Cash Flows from Investing Activities A T Sale of Investments 28600 T Sale of Machinery 2250 1 Purchase of Machinery (14100) Addition to Buildings (11400) T Purchase of Investments (8600) T Purchase of Investments (8600) T Net Cash Used by Investing Activities A (3250) Cash Flows from Financing Activities Cash Dividends Paid (21300) Reduction in Long-term Note Payable (9600) T Net Cash Used by Financing Activities A (30900) Net Increase in Cash 8300 7 Cash, January 1, 2020 A 33900 T Cash, December 31, 2020 42200
