Instant Brake Inc.?s comparative balance sheet information at December 31, 2020 and 2019, and its income statement for the year ended December 31, 2020, are as follows:

During 2020, the following transactions occurred:

1. Purchased equipment for $21,000 cash.

2. Sold the investment on January 1, 2020, for $46,800, resulting in investment income of $20,520.

3. Sold equipment for $7,620 cash that had originally cost $41,520 and had $20,080 of accumulated depreciation.

4. Issued $16,000 of bonds payable at face value.

Required

1. How much cash was paid in dividends?

2. Prepare a statement of cash flows for Instant Brake for the year ended December 31, 2020, using the indirect method.

Analysis Component: The net increase in cash during 2020 for Instant Brake was $16,640. Briefly explain what caused this change using the statement of cash flows prepared in part 2 above.

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Instant Brake Inc. Instant Brake Inc. Income Statement Balance Sheet Information December 31, 2020 December 31 Net Sales. 885,000 2020 2019 Change $ 40,000 $ 23,360 $ 16,640 26,280 Cost of goods sold. 568,000 317,000 Cash. Cash equivalents. Gross profit. 8,000 18,280 Operating expenses. 132,640 86,720 57,280 Accounts receivable. 29,440 41,200 173,840 Depreciation expense Inventory. 112,640 75,520 37,120 143,160 Operating profit. 26,280 (26,280) Investment. -0- Loss on sale of equipment. Investment income 13,820 75,200 Land. 75,200 -0- 20,520 432,920 (20,520) Building and equipment. 412,400 149,860 Profit before taxes. 21,120 Accumulated depreciation. 110,080 88,960 20,000 Income taxes Accounts payable. Dividends payable. 10,040 36,200 (26,160) Profit 129,860 1,000 2,400 1,400 Bonds payable. 16,000 -0- 16,000 Preferred shares. 80,000 80,000 -0- Common shares. Retained earnings. 404,480 404,480 -0- 130,240 59,680 70,560