Financial statement data for Gibbons Electronics Company for 2020 follow.

Additional information:

1. Equipment that cost $100,000 and had a net carrying amount of $40,000 was sold for $50,000.

2. Dividends were declared and paid during the year.

Required

a. Prepare a statement of cash flows for Gibbons Electronics Company for the year ended December 31, 2020. Include supplementary information to disclose the amounts paid for interest and income taxes using the indirect method.

b. Determine the cash flows from operating activities using the direct method.

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GIBBONS ELECTRONICS COMPANY Comparative Statement of Financial Position Dec. 31, 2019 Dec. 31, 2020 Assets $ 285,000 $ 295,000 Cash Accounts receivable 334,000 384,000 Inventory 311,000 266,000 35,000 Prepaid insurance 50,000 Total current assets 980,000 980,000 Property, plant, and equipment 650,000 590,000 Accumulated depreciation (165,000) (130,000) Net capital assets 485,000 460,000 Total assets $1,465,000 $1,440,000 Liabilities and shareholders' equity $ 60,000 Accounts payable %24 50,000 Wages payable 15,000 10,000 Unearned revenue 50,000 35,000 Income tax payable 55,000 45,000 Total current liabilities 180,000 140,000 575,000 Bonds payable 490,000 Total liabilities 670,000 715,000 285,000 Common shares 350,000 Retained earnings 445,000 440,000 Total shareholders' equity 725,000 795,000 Total liabilities and shareholders' equity $1,465,000 $1,440,000 GIBBONS ELECTRONICS COMPANY Statement of Income For the year ended December 31, 2020 $3,855,000 Sales revenue Gain on sale of equipment 10,000 3,865,000 Expenses Cost of goods sold $2,105,000 Wages ex pense 353,000 Depreciation expense 95,000 Other operating expenses 555,000 Interest expense 60,000 Income tax expense 345,000 Total ex penses 3,513,000 $ 352,000 Net income