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

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

Problem 1Q

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Question

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).)