Problem 23-06 Your answer is partially correct. Try again. Comparative balance sheet accounts of Marigold Inc. are presented below. MARIGOLD INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,900 Accounts Receivable 70,600 60,300 Inventory 30,100 24,100 Equity investments 22,000 38,900 Machinery 30,300 18,700 Buildings 67,900 55,700 Land 7,600 7,600 $270,900 $239,200 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 $2,300 5,600 13,500 34,700 3,500 21,000 150,000 40,300 $270,900 $1,500 2,200 8,900 24,500 2,600 30,800 125,000 43,700 $239,200 Additional data (ignoring taxes): 1. Net income for the year was $43,000. 2. Cash dividends declared and paid during the year were $21,400. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $24,700 were sold during the year for $28,400. 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. Marigold's 2020 income statement follows (ignoring taxes). Sales revenue $540,400 Less: Cost of goods sold 381,000 Gross margin 159,400 Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts) 119,300 Income from operations 40,100 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800) 2,900 Net income $43,000 (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 44450 (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).) MARIGOLD INC. Statement of Cash Flows For the Year Ended December 31, 2020 (Indirect Method) Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to Cash Flows from Operating Activities Depreciation Expense 43000 V 8750 Loss on Sale of Machinery 800 ES (3700) Gain on Sale of Investments Increase in Accounts Receivable (Net) PL (9500) Increase in Inventory (6000) Increase in Accounts Payable 10200 Increase in Accrued Payables 900 1450 Net Cash Provided by Operating Activities 44450 Cash Flows from Investing Activities Sale of Machinery 2250 Purchase of Machinery (15400) Purchase of Investments (12200) Sale of Investments 28400 x =x Cash Dividends Paid (7800) Net Cash Used by Investing Activities (4750) Cash Flows from Financing Activities Reduction in Long-term Note Payable v (9800) Cash Dividends Paid (21400) Net Cash Used by Financing Activities (31200) Net Increase in Cash 8500 Cash, January 1, 2020 33900 Cash, December 31, 2020 42400
