You have completed the field work in connection with your audit of Sarasota Corporation for the year ended December 31, 2025. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2025 Dec. 31, 2024 Increase or (Decrease) Cash $291.795 $312.900 ($21,105) Accounts receivable 492,895 370,650 122,245 Inventory 778,785 640,500 138,285 Prepaid expenses 12.600 8,400 4.200 Investment in subsidiary 116,025 0 116,025 Cash surrender value of life insurance 2,419 1,890 529 Machinery 217.350 199.500 17.850 Buildings 561.960 428,295 133.665 Land 55.125 55.125 0 Patents 72,450 67,200 5,250 Copyrights 42,000 52.500 (10,500) Bond discount and issue costs 4,727 0 4,727 $2,648,131 $2,136,960 $511,171 Income taxes navable. $94 762 $83.580 $11 182 $2.648.131 $2,136,960 $511,171 Income taxes payable $94,762 $83.580 $11.182 Accounts payable 314.244 294,000 20,244 Dividends payable. 73.500 0 73,500 Bonds payable-8% 131.250 0 131.250 Bonds payable-12% 105,000 (105,000) Allowance for doubtful accounts 37,065 42.000 (4.935) Accumulated depreciation-buildings 445,200 420,000 25.200 Accumulated depreciation-machinery 181.650 136,500 45,150 Premium on bonds payable 0 2,520 (2.520) Common stock-no par 1.235.010 1.525.860 (290,850) Paid-in capital in excess of par-common stock 114,450 0 114,450 Retained earnings-unappropriated 21.000 (472.500) 493.500 $2.648.131 $2,136,960 $511,171 Statement of Retained Earnings For the Year Ended December 31, 2025 Statement of Retained Earnings For the Year Ended December 31, 2025 January 1,2025 Balance (deficit) $(472.500) March 31,2025 Net income for first quarter of 2025 26,250 April 1.2025 Transfer from paid-in capital 446,250 Balance 0 December 31.2025 Net income for last three quarters of 2025 94,500 Dividend declared-payable January 21, 2026 (73,500) $21,000 Balance Your working papers from the audit contain the following information: 1 2. 3. 4. 5. On April 1, 2025, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock On November 1, 2025, 31,080 shares of no-par stock were sold for $269,850. The board of directors voted to regard $5 per share as stated capital. A patent was purchased for $15,750. During the year, machinery that had a cost basis of $17,220 and on which there was accumulated depreciation of $5.460 was sold for $9,450. No other plant assets were sold during the year. The 12%, 20-year bonds were dated and issued on January 2. 2013. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2025. MacBook Air Your working papers from the audit contain the following information: 1. 2. 3. 4 5. 6. 2 On April 1, 2025, the existing deficit was written off against paid-in capital created by reducing the stated value of the no par stock. On November 1, 2025, 31.080 shares of no-par stock were sold for $269,850. The board of directors voted to regard $5 per share as stated capital. A patent was purchased for $15,750. During the year, machinery that had a cost basis of $17.220 and on which there was accumulated depreciation of 55.460 was sold for $9,450. No other plant assets were sold during the year. The 12%, 20-year bonds were dated and issued on January 2, 2013. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2025 The 8%, 40-year bonds were dated January 1, 2025, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $801. Sarasota Corporation acquired 70% control in Crimson Company on January 2, 2025, for $105,000. The income statement of Crimson Company for 2025 shows a net income of $15,750 B Major repairs to buildings of $7,560 were charged to Accumulated Depreciation-Buildings 9. Interest paid in 2025 was $11.025 and income taxes paid were $35.700. From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to O decimal places, eg 2.500. Show amounts that decrease cash flow with either a sign eg-15.000 or in parenthesis es (15,000) MacBook Air SARASOTA CORPORATION Statement of Cash Flows For the Year Ended December 31, 2025 Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to Net Cash Used by Operating Activities Amortization of Patents) Loss on Sale of Machinery Depreciation of Machinery: Gain on Redemption of Bonds Amortization of Bond Premium Amortization of Bond Discount Investment in Subsidiary (Indirect Method) Investment in Subsidiary Depreciation of Building Increase in Accounts Receivable (Net) Increase in inventory Increase in Prepaid Expenses increase in Taxes Payable Increase in Accounts Payable Decrease in Cash Surrender Value of Life Insurance Net Cash Used by Operating Activities Cash Flows from Investing Activities Purchase of Patent MerBook Alt 3 Purchine of Patent" Sale of Machinery Purchase of Machinery Investment in Subsidiary Addition to Buildings Major Repairs to Building Increase in Cash Surrender Value of Life Insurance Net Cash Used by Investing Activities Supplemental disclosures of cash flow information: Textbook and Media