Prepare the statement of cash flows for richcorp using the direct method RichCorpIncome StatementFYE 12/31/20Revenues3,560,000Cost of Goods Sold(1,860,000)Operating Expenses(884,000)Interest Expense(48,000)Loss on sale of equipment(8,000)(2,800,000)Income before income taxes760,000Income tax expense(260,000)Net Income500,000Additional Information relating to 2020 activities:Cash dividends of $220,000 were declared and paidEquipment costing $164,000 and having a carrying value of $144,000, was sold for $136,000 cashEquipment with a cost of $664,000 was purchased for cashOperating expenses include depreciation expense of $132,000 and amortization of prepaid expenses of $8,000Land was sold at its book value for cashInterest expense of $48,000 was paid in cashCommon stock was issued for cashInventory was purchased on creditAssume operating expenses are paid in cash DIRECT METHOD12/31/19DebitsCredits12/31/20Cash148,000216,000Accounts Receivable104,000272,000Inventory216,000Prepaid Insurance24,00016,000Land280,000180,000Buildings800,000800,000Equipment272,000772,0001,628,0002,472,000Accumulated Depreciation, Buildings44,00084,000Accumulated Depreciation, Equipment40,000112,000Accounts Payable160,000132,000Bonds Payable600,000440,000Common Stock ($1 par)240,000880,000Retained Earnings544,000824,0001,628,0002,472,000Income Statement SectionRevenuesCost of Goods SoldOperating ExpensesInterest ExpenseLoss on sale of equipmentIncome tax expenseNet Income

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Description: Prepare the statement of cash flows for richcorp using the direct method RichCorpIncome StatementFYE 12/31/20Revenues3,560,000Cost of Goods Sold(1,860,000)Operating Expenses(884,000)Interest Expense(48,000)Loss on sale of equipment(8,000)(2,800,000)I

Statement of cash flows shows all cash inflows and cash outflows of business during the particular…

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Accounting

Prepare the statement of cash flows for richcorp using the direct method

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 55PSA

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