10.Comparative balance sheet accounts of Sage Inc. are presented below.SAGE INC.COMPARATIVE BALANCE SHEET ACCOUNTSAS OF DECEMBER 31, 2020 AND 2019 December 31Debit Accounts 2020 2019Cash $42,400 $33,800Accounts Receivable 70,500 59,700Inventory 30,300 24,200Equity investments 22,100 38,300Machinery 30,200 18,500Buildings 67,500 55,800Land 7,400 7,400 $270,400 $237,700 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500Accumulated Depreciation—Machinery 5,500 2,300Accumulated Depreciation—Buildings 13,500 8,900Accounts Payable 34,700 24,700Accrued Payables 3,300 2,700Long-Term Notes Payable 20,800 31,000Common Stock, no-par 150,000 125,000Retained Earnings 40,300 41,600 $270,400 $237,700Additional data (ignoring taxes):1. Net income for the year was $44,800.2. Cash dividends declared and paid during the year were $21,100.3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.4. Equity investments (level of ownership is less than 20%) that cost $25,100 were sold during the year for $28,800. No unrealized gains and losses were recorded on these investments in 2020.5. Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250.Sage’s 2020 income statement follows (ignoring taxes).Sales revenue $543,200Less: Cost of goods sold 382,100Gross margin 161,100Less: Operating expenses (includes $8,550 depreciation and $5,537 bad debts) 119,200Income from operations 41,900Other: Gain on sale of investments $3,700 Loss on sale of machinery (800) 2,900Net income $44,800(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Net cash flow from operating activities $ (b) 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).)SAGE INC.Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $ $

Statement of cash flow (CFS) are those financial statement which shows the flows of cash and cash…

Answered: (a) Compute net cash flow from…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.2C

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10.

Comparative balance sheet accounts of Sage Inc. are presented below.

SAGE INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019
	December 31
Debit Accounts	2020	2019
Cash	$42,400	$33,800
Accounts Receivable	70,500	59,700
Inventory	30,300	24,200
Equity investments	22,100	38,300
Machinery	30,200	18,500
Buildings	67,500	55,800
Land	7,400	7,400
	$270,400	$237,700

Credit Accounts
Allowance for Doubtful Accounts	$2,300	$1,500
Accumulated Depreciation—Machinery	5,500	2,300
Accumulated Depreciation—Buildings	13,500	8,900
Accounts Payable	34,700	24,700
Accrued Payables	3,300	2,700
Long-Term Notes Payable	20,800	31,000
Common Stock, no-par	150,000	125,000
Retained Earnings	40,300	41,600
	$270,400	$237,700

Additional data (ignoring taxes):

1.		Net income for the year was $44,800.
2.		Cash dividends declared and paid during the year were $21,100.
3.		A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
4.		Equity investments (level of ownership is less than 20%) that cost $25,100 were sold during the year for $28,800. No unrealized gains and losses were recorded on these investments in 2020.
5.		Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250.

Sage’s 2020 income statement follows (ignoring taxes).

Sales revenue			$543,200
Less: Cost of goods sold			382,100
Gross margin			161,100
Less: Operating expenses (includes $8,550 depreciation and $5,537 bad debts)			119,200
Income from operations			41,900
Other: Gain on sale of investments	$3,700
Loss on sale of machinery	(800	)	2,900
Net income			$44,800

(a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Net cash flow from operating activities

(b) 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).)

SAGE INC. Statement of Cash Flows (Indirect Method)

		$
Adjustments to reconcile net income to

	$
























		$

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