Comparative balance sheet accounts of Sarasota Inc. are presented below. SARASOTA INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,900 Accounts Receivable 70,600 60,300 Inventory 30,100 24,100 Equity investments 22,000 38,900 Machinery 30,300 18,700 Buildings 67,900 55,700 Land 7,600 7,600 $270,900 $239,200 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500 Accumulated Depreciation—Machinery 5,600 2,200 Accumulated Depreciation—Buildings 13,500 8,900 Accounts Payable 34,700 24,500 Accrued Payables 3,500 2,600 Long-Term Notes Payable 21,000 30,800 Common Stock, no-par 150,000 125,000 Retained Earnings 40,300 43,700 $270,900 $239,200 Additional data (ignoring taxes): 1. Net income for the year was $43,000. 2. Cash dividends declared and paid during the year were $21,400. 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 $24,700 were sold during the year for $28,400. 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. Sarasota’s 2020 income statement follows (ignoring taxes). Sales revenue $540,400 Less: Cost of goods sold 381,000 Gross margin 159,400 Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts) 119,300 Income from operations 40,100 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800 ) 2,900 Net income $43,000 (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.

Comparative balance sheet accounts of Sarasota Inc. are presented below. SARASOTA INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $42,400 $33,900 Accounts Receivable 70,600 60,300 Inventory 30,100 24,100 Equity investments 22,000 38,900 Machinery 30,300 18,700 Buildings 67,900 55,700 Land 7,600 7,600 $270,900 $239,200 Credit Accounts Allowance for Doubtful Accounts $2,300 $1,500 Accumulated Depreciation—Machinery 5,600 2,200 Accumulated Depreciation—Buildings 13,500 8,900 Accounts Payable 34,700 24,500 Accrued Payables 3,500 2,600 Long-Term Notes Payable 21,000 30,800 Common Stock, no-par 150,000 125,000 Retained Earnings 40,300 43,700 $270,900 $239,200 Additional data (ignoring taxes): 1. Net income for the year was $43,000. 2. Cash dividends declared and paid during the year were $21,400. 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 $24,700 were sold during the year for $28,400. 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. Sarasota’s 2020 income statement follows (ignoring taxes). Sales revenue $540,400 Less: Cost of goods sold 381,000 Gross margin 159,400 Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts) 119,300 Income from operations 40,100 Other: Gain on sale of investments $3,700 Loss on sale of machinery (800 ) 2,900 Net income $43,000 (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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 7E

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Question

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

SARASOTA INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019
	December 31
Debit Accounts	2020	2019
Cash	$42,400	$33,900
Accounts Receivable	70,600	60,300
Inventory	30,100	24,100
Equity investments	22,000	38,900
Machinery	30,300	18,700
Buildings	67,900	55,700
Land	7,600	7,600
	$270,900	$239,200

Credit Accounts
Allowance for Doubtful Accounts	$2,300	$1,500
Accumulated Depreciation—Machinery	5,600	2,200
Accumulated Depreciation—Buildings	13,500	8,900
Accounts Payable	34,700	24,500
Accrued Payables	3,500	2,600
Long-Term Notes Payable	21,000	30,800
Common Stock, no-par	150,000	125,000
Retained Earnings	40,300	43,700
	$270,900	$239,200

Additional data (ignoring taxes):

1.		Net income for the year was $43,000.
2.		Cash dividends declared and paid during the year were $21,400.
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 $24,700 were sold during the year for $28,400. 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.

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

Sales revenue			$540,400
Less: Cost of goods sold			381,000
Gross margin			159,400
Less: Operating expenses (includes $8,750 depreciation and $5,042 bad debts)			119,300
Income from operations			40,100
Other: Gain on sale of investments	$3,700
Loss on sale of machinery	(800	)	2,900
Net income			$43,000

(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.

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