Comparative balance sheet accounts of Sheridan Inc. are presented below. SHERIDAN INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2020 AND 2019 December 31 Debit Accounts 2020 2019 Cash $41,600 $33,700 Accounts Receivable 70,500 60,600 Inventory 29,700 23,700 Equity investments 22,300 38,900 Machinery 29,900 18,800 Buildings 67,600 56,300 Land 7,600 7,600 $269,200 $239,600 Credit Accounts Allowance for Doubtful Accounts $2,200 $1,500 Accumulated Depreciation—Machinery 5,600 2,300 Accumulated Depreciation—Buildings 13,500 9,000 Accounts Payable 34,700 24,800 Accrued Payables 3,300 2,600 Long-Term Notes Payable 20,900 31,300 Common Stock, no-par 150,000 125,000 Retained Earnings 39,000 43,100 $269,200 $239,600 Additional data (ignoring taxes): 1. Net income for the year was $41,800. 2. Cash dividends declared and paid during the year were $20,900. 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 $25,000 were sold during the year for $28,800. No unrealized gains and losses were recorded on these investments in 2020. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. Sheridan’s 2020 income statement follows (ignoring taxes). Sales revenue $536,900 Less: Cost of goods sold 378,400 Gross margin 158,500 Less: Operating expenses (includes $8,550 depreciation and $4,997 bad debts) 119,700 Income from operations 38,800 Other: Gain on sale of investments $3,800 Loss on sale of machinery (800 ) 3,000 Net income $41,800 (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).) SHERIDAN INC. Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $ $ Submit Answer

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Comparative balance sheet accounts of Sheridan Inc. are presented below.

SHERIDAN INC.
COMPARATIVE BALANCE SHEET ACCOUNTS
AS OF DECEMBER 31, 2020 AND 2019
   
December 31
Debit Accounts  
2020
 
2019
Cash  
$41,600
 
$33,700
Accounts Receivable  
70,500
 
60,600
Inventory  
29,700
 
23,700
Equity investments  
22,300
 
38,900
Machinery  
29,900
 
18,800
Buildings  
67,600
 
56,300
Land  
7,600
 
7,600
   
$269,200
 
$239,600
         
Credit Accounts        
Allowance for Doubtful Accounts  
$2,200
 
$1,500
Accumulated Depreciation—Machinery  
5,600
 
2,300
Accumulated Depreciation—Buildings  
13,500
 
9,000
Accounts Payable  
34,700
 
24,800
Accrued Payables  
3,300
 
2,600
Long-Term Notes Payable  
20,900
 
31,300
Common Stock, no-par  
150,000
 
125,000
Retained Earnings  
39,000
 
43,100
   
$269,200
 
$239,600

Additional data (ignoring taxes):

1.   Net income for the year was $41,800.
2.   Cash dividends declared and paid during the year were $20,900.
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 $25,000 were sold during the year for $28,800. No unrealized gains and losses were recorded on these investments in 2020.
5.   Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150.

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

Sales revenue        
$536,900
Less: Cost of goods sold        
378,400
Gross margin        
158,500
Less: Operating expenses (includes $8,550 depreciation and $4,997 bad debts)        
119,700
Income from operations        
38,800
Other: Gain on sale of investments  
$3,800
     
          Loss on sale of machinery  
(800
)
 
3,000
Net income        
$41,800

(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).)

SHERIDAN INC.
Statement of Cash Flows
                                                           
(Indirect Method)
                                                           
   
                                                           
 
Adjustments to reconcile net income to    
                                                           
   
                                                           
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
   
 
                                                           
 
 
     
                                                           
   
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
                                                           
 
 
     
                                                           
   
                                                           
 
 
                                                           
 
 
                                                           
 
 
     
                                                           
 
 
                                                           
 
 
                                                           
 
 
 
 
 
 
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