The condensed financial statements of Stauttner, Inc. appear below: STAUTTNER, INC. Statement of Financial Position December 31 Assets 2020 2019 Cash $87,493 $50,900 Accounts receivable 80,600 76,880 Inventories 148,870 153,390 Prepaid expenses 8,060 7,690 Property, plant, and equipment 303,800 297,600 Accumulated depreciation (92,380) (89,280) Intangible assets 67,180 57,040 $603,623 $554,220 Liabilities and Shareholders' Equity $58,030 $50,840 Accounts payable Wages payable 21,080 19,220 Income taxes payable 1,550 2,170 Bonds payable 117,800 136,400 Common shares 217,000 217,000 Retained earnings 188,163 128,590 $603,623 $554,220 STAUTTNER, INC. Statement of Income Year Ended December 31, 2020 Sales $679,460 Cost of goods sold 427,800 Gross profit 251,660 Operating expenses $47,740 57,660 Depreciation expense Loss on sale of equipment 8,870 114,270 Profit from operations 137,390 Less: Interest expense 3,390 Profit before income tax 134,000 Income tax expense 40,200 Net income $93,800 1. New equipment costing $88,040 was purchased for cash during the year. 2. The increase in intangible assets is related to legal fees incurred to trademark new packaging designs. Accounts payable relate only to merchandise creditors. 3. 4. Operating expenses included wages expense of $39,680. 5. Interest expense was paid in cash during the year. STAUTTNER, INC. Statement of Cash Flows (Direct Method) Year Ended December 31, 2020 $ $ A