Question $7$

Sarasota Inc., a greeting card company, had the following statements prepared as of December $31,2020.$

SARASOTA INC.

COMPARATIVE BALANCE SHEET

AS OF DECEMBER $31,2020$ AND $2019$

$12/31/2012/31/19$

Cash $$6,000$ $$7,100$

Accounts receivable $62,00050,900$

Short$-$term debt investments $($available$-$for$-$sale$)34,90017,900$

Inventory $40,40059,800$

Prepaid rent $5,1003,900$

Equipment $154,900129,200$

Accumulated depreciation$$equipment $(34,900)(25,200)$

Copyrights $46,20049,500$

Total assets $$314,600$ $$293,100$

Accounts payable $$46,500$ $$40,100$

Income taxes payable $4,0006,100$

Salaries and wages payable $8,0003,900$

Short$-$term loans payable $8,10010,000$

Long$-$term loans payable $60,60069,200$

Common stock, $$10$ par $100,000100,000$

Contributed capital, common stock $30,00030,000$

Retained earnings $57,40033,800$

Total liabilities & stockholders$$ equity $$314,600$ $$293,100$

SARASOTA INC.

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER $31,2020$

Sales revenue $$340,125$

Cost of goods sold $174,600$

Gross profit $165,525$

Operating expenses $119,000$

Operating income $46,525$

Interest expense $$11,400$

Gain on sale of equipment $2,0009,400$

Income before tax $37,125$

Income tax expense $7,425$

Net income $$29,700$

Additional information:

$1.$ Dividends in the amount of $$6,100$ were declared and paid during $2020.$

$2.$ Depreciation expense and amortization expense are included in operating expenses.

$3.$ No unrealized gains or losses have occurred on the investments during the year.

$4.$ Equipment that had a cost of $$20,100$ and was $70\%$ depreciated was sold during $2020.$

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$.(15,000).)$

SARASOTA INC.

Statement of Cash Flows

choose the accounting period December $31,2020$For the Year Ended December $31,2020$For the Quarter Ended December $31,2020$

Cash Flows from Operating Activities

Net Income $ $29,700$

Adjustments to reconcile net income to

Net Cash Provided by Operating Activities

Depreciation Expense Net $(34,900-25,200)+20,100*70/100)23,770$

Gain on Sale of Equipment $(-2,000$

Increase in Prepaid Rent $(5,100-3,900)-1,200$

Amortization of Copyright $(49,500-46,200)3,300$

Increase in Accounts Receivable $(62,000-50,900)-11,100$

Decrease in Inventories $(59,800-40,400)19,400$

Increase in Accounts Payable $(40,100-46,500)6,400$

Increase in Salaries and Wages Payable $(3,900-8,000)4,100$

Decrease in Income Taxes Payable $(6,100-4,000)-2,100$

$40,570$

Net Cash Provided by Operating Activities Net $70,270$

Cash Flows from Investing Activities

Purchase of Investments enter a dollar amount

Sale of Equipment enter a dollar amount

Purchase of Equipment enter a dollar amount

Net Cash Used by Investing Activities enter a total amount for section two

Cash Flows from Financing Activities

Principal Payment on Short$-$term Loan enter a dollar amount

Principal Payment on Long$-$term Loan enter a dollar amount

Dividend Payments enter a dollar amount

Net Cash Used by Financing Activities enter a total amount for section three

Net Decrease in Cash enter a total amount for three sections

Cash at Beginning of Period enter a dollar amount

Cash at End of Period $enter a total of the two previous amounts

Please show worked and thanks for your help