You have completed the field work in connection with your audit of Cheyenne Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2020 Dec. 31, 2019 Increase or (Decrease) Cash $316,806 $339,720 ($22,914 ) Accounts receivable 535,143 402,420 132.723 Inventory 845,538 695,400 150,138 Prepaid expenses 13,680 9,120 4,560 Investment in subsidiary 125,970 0 125,970 Cash surrender value of life insurance 2,627 2.052 575 Machinery 235,980 216,600 19,380 Buildings 610,128 465,006 145,122 Land 59,850 59,850 0 Patents 78,660 72,960 5,700 Copyrights 45,600 57.000 (11,400) Bond discount and issue cost 5,132 0 5,132 $2,875,114 $2,320,128 $554,986 Income taxes payable $102,885 $90,744 $12,141 Accounts payable 341,179 319,200 21,979 Dividends payable 79,800 0 79,800 Bonds payable-8% 142,500 0 142,500 Bonds payable-12% 0 114,000 (114,000) Allowance for doubtful accounts 40,242 45.600 (5,358 ) 483.360 456.000 27,360 Accumulated depreciation-buildings Accumulated depreciation-machinery 197.220 148,200 49,020 Premium on bonds payable 0 2,736 (2,736) Common stock-no par 1,340,868 1,656,648 (315,780) Paid-in capital in excess of par-common stock 124,260 0 124.260 Retained earnings-unappropriated 22,800 (513,000) 535,800 $2,875,114 $2,320,128 $554,986 STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 January 1, 2020 Balance (deficit) $(513,000) March 31, 2020 Net income for first quarter of 2020 28,500 April 1, 2020 Transfer from paid-in capital 484,500 Balance 0 December 31, 2020 Net income for last three quarters of 2020 102,600 Dividend declared-payable January 21, 2021 (79,800) Balance $22,800 Your working papers from the audit contain the following information: 1. On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no- par stock. 2. On November 1, 2020, 33,744 shares of no-par stock were sold for $292,980. The board of directors voted to regard $5 per share as stated capital. 3. A patent was purchased for $17,100. 4. During the year, machinery that had a cost basis of $18,696 and on which there was accumulated depreciation of $5,928 was sold for $10,260. No other plant assets were sold during the year. 5. The 12%, 20-year bonds were dated and issued on January 2, 2008. 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, 2020. 6. The 8%, 40-year bonds were dated January 1, 2020, 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 $956. 7. Cheyenne Corporation acquired 70% control in Crimson Company on January 2, 2020, for $114,000. The income statement of Crimson Company for 2020 shows a net income of $17,100. 8. Major repairs to buildings of $8,208 were charged to Accumulated Depreciation-Buildings. 9. Interest paid in 20 was $11,970 and incom taxes paid were $38,760. 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 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis eg. (15,000).) CHEYENNE CORPORATION Statement of Cash Flows (Indirect Method) Adjustments to reconcile net income to > $ > > > > > A > > > > > > >
