Question 26 Martinez Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: MARTINEZ Inc. Comparative Statement of Financial Position December 31 2020 2019 Cash $58,200 $53,900 Accounts receivable 58,900 52,000 Inventory 42,000 65,000 Prepaid rent 6,200 3,800 Equipment 151,000 127,000 Accumulated depreciation equipment (31,800) (22,500) Total assets $284,500 $279,200 Accounts payable $49,500 $36,500 Income tax payable 3,500 6,400 Long-term loans payable 64,000 70,000 Common shares 125,700 125,700 Retained earnings 41,800 40,600 Total liabilities and shareholders' equity $284,500 $279,200 MARTINEZ Inc. Income Statement Year Ending December 31, 2020 Sales revenue $365,000 Cost of goods sold 205,000 Gross margin 160,000 Operating expenses 117,600 Operating income 42,400 Interest expense $11,300 Gain on disposal of equipment (2,800) 8,500 Income before income tax 33,900 Income tax expense 21,400 Net income $12,500 Additional information: 1. Dividends on common shares in the amount of $11,300 were declared and paid during 2020. 2. Depreciation expense of $24,000 is included in operating expenses. 3. Equipment with a cost of $21,000 that was 70% depreciated was sold during 2020. 1. Dividends on common shares in the amount of $11,300 were declared and paid during 2020. 2. Depreciation expense of $24,000 is included in operating expenses. 3. Equipment with a cost of $21,000 that was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000).) MARTINEZ Inc. Statement of Cash Flows (Direct Method) 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).) MARTINEZ CORPORATION Statement of Cash Flows (Indirect Method) Adjustments to reconcile net income to net cash provided by operating activities