Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2020. BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 12/31/20 12/31/19 Cash $6,000 $7,000 Accounts receivable 62,000 51,000 Short-term debt investments (available-for-sale) 35,000 18,000 Inventory 40,000 60,000 Prepaid rent 5,000 4,000 Equipment 154,000 130,000 Accumulated depreciation—equipment (35,000 ) (25,000 ) Copyrights 46,000 50,000 Total assets $313,000 $295,000 Accounts payable $46,000 $40,000 Income taxes payable 4,000 6,000 Salaries and wages payable 8,000 4,000 Short-term loans payable 8,000 10,000 Long-term loans payable 60,000 69,000 Common stock, $10 par 100,000 100,000 Contributed capital, common stock 30,000 30,000 Retained earnings 57,000 36,000 Total liabilities & stockholders’ equity $313,000 $295,000 BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 Sales revenue $338,150 Cost of goods sold 175,000 Gross profit 163,150 Operating expenses 120,000 Operating income 43,150 Interest expense $11,400 Gain on sale of equipment 2,000 9,400 Income before tax 33,750 Income tax expense 6,750 Net income $27,000 Additional information: 1. Dividends in the amount of $6,000 were declared and paid during 2020. 2. Depreciation expense and amortization expense are included in operating expenses. 3. No unrealized gains or losses have occurred on the investments during the year. 4. Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the indirect method.

Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2020. BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019 12/31/20 12/31/19 Cash $6,000 $7,000 Accounts receivable 62,000 51,000 Short-term debt investments (available-for-sale) 35,000 18,000 Inventory 40,000 60,000 Prepaid rent 5,000 4,000 Equipment 154,000 130,000 Accumulated depreciation—equipment (35,000 ) (25,000 ) Copyrights 46,000 50,000 Total assets $313,000 $295,000 Accounts payable $46,000 $40,000 Income taxes payable 4,000 6,000 Salaries and wages payable 8,000 4,000 Short-term loans payable 8,000 10,000 Long-term loans payable 60,000 69,000 Common stock, $10 par 100,000 100,000 Contributed capital, common stock 30,000 30,000 Retained earnings 57,000 36,000 Total liabilities & stockholders’ equity $313,000 $295,000 BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020 Sales revenue $338,150 Cost of goods sold 175,000 Gross profit 163,150 Operating expenses 120,000 Operating income 43,150 Interest expense $11,400 Gain on sale of equipment 2,000 9,400 Income before tax 33,750 Income tax expense 6,750 Net income $27,000 Additional information: 1. Dividends in the amount of $6,000 were declared and paid during 2020. 2. Depreciation expense and amortization expense are included in operating expenses. 3. No unrealized gains or losses have occurred on the investments during the year. 4. Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2020. Prepare a statement of cash flows using the indirect method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2020.

BRECKER INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2020 AND 2019
	12/31/20		12/31/19
Cash	$6,000			$7,000
Accounts receivable	62,000			51,000
Short-term debt investments (available-for-sale)	35,000			18,000
Inventory	40,000			60,000
Prepaid rent	5,000			4,000
Equipment	154,000			130,000
Accumulated depreciation—equipment	(35,000	)		(25,000	)
Copyrights	46,000			50,000
Total assets	$313,000			$295,000

Accounts payable	$46,000			$40,000
Income taxes payable	4,000			6,000
Salaries and wages payable	8,000			4,000
Short-term loans payable	8,000			10,000
Long-term loans payable	60,000			69,000
Common stock, $10 par	100,000			100,000
Contributed capital, common stock	30,000			30,000
Retained earnings	57,000			36,000
Total liabilities & stockholders’ equity	$313,000			$295,000

BRECKER INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2020
Sales revenue		$338,150
Cost of goods sold		175,000
Gross profit		163,150
Operating expenses		120,000
Operating income		43,150
Interest expense	$11,400
Gain on sale of equipment	2,000	9,400
Income before tax		33,750
Income tax expense		6,750
Net income		$27,000

Additional information:

1.		Dividends in the amount of $6,000 were declared and paid during 2020.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2020.

Prepare a statement of cash flows using the indirect method.

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