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Question 21 Use the following financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2020 using

Question 21

Use the following financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2020 using the indirect method.

Kris Kringle, Inc. Balance Sheets At December 31

2020

2019

Assets:

Cash

$174,525

$65,200

Accounts receivable, net

52,850

56,750

Merchandise inventory

167,750

144,850

Prepaid expenses

16,080

12,680

Equipment

290,600

245,600

Accumulated depreciation-Equipment

(80,600)

(97,600)

Total assets

$621,205

$427,480

Liabilities:

Accounts payable

$55,270

$45,450

Income taxes payable

10,320

12,240

Notes payable (long term)

59,200

79,200

Total liabilities

$124,790

$136,890

Equity:

Common stock

200,000

150,000

Paid-in capital in excess of par

53,000

40,000

Retained earnings

243,415

100,590

Total equity

$426,415

$290,590

Total liabilities and equity

$621,205

$427,480

Kris Kringle, Inc. Income Statement For Year Ended December 31, 2020

Sales

$488,000

Cost of goods sold

$222,540

Depreciation expense

25,000

Other operating expenses

106,260

Interest expense

6,400

(360,200)

Other gains (losses):

Gain on sale of equipment

2,850

Income before taxes

130,650

Income taxes expense

30,525

Net income

$100,125

Additional Information a. Cash dividends declared and paid were $55,000. b. New equipment is purchased for $150,000 cash. c. Received $49,550 cash for the sale of equipment.

d. Issued new shares of stock receiving $157,000 cash.

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