The following items include the 2020 and 2019 balance sheet information and the 2020 income statement of the Clear Water Corporation. Additional information about the company?s 2020 transactions is presented after the financial statements.

Additional information:

1. Received $5,000 from the sale of the land investment that originally cost $2,000.

2. Received $400 cash from the First National Bank on December 31, 2020, as interest income.

3. Sold old equipment for $1,400. The old equipment originally cost $4,000 and had accumulated depreciation of $2,000.

4. Purchased land costing $5,000 on December 31, 2020, in exchange for a note payable. Both principal and interest are due on June 30, 2021.

5. Purchased new equipment for $9,000 cash.

6. Paid $3,500 of notes payable.

7. Sold additional bonds payable at par of $3,000 on January 1, 2020.

8. Issued 1,000 common shares for cash at $2 per share.

9. Declared and paid a $5,800 cash dividend on October 1, 2020.

Required

Prepare a statement of cash flows for Clear Water Corporation using the indirect method.

Transcribed Image Text:

Clear Water Corporation Comparative Balance Sheet Information Clear Water Corporation Income Statement For Year Ended December 31, 2020 December 31 Revenues: 2020 2019 Sales. $ 800 $ 1,000 4,500 120,000 Cash and cash equivalents. Accounts receivable. 50,000 Cost of goods sold. 3,100 Gross profit. 70,000 16,000 Merchandise inventory.. 19,000 Operating expenses.. Prepaid expenses. 700 600 Other expenses 54,800 Investment in land.. 10,000 12,000 Depreciation expense, 9,000 4,000 Land buildings. 2,000 Buildings. 60,000 60,000 Depreciation expense, Accumulated depreciation, 4,000 equipment. buildings. 38,000 36,000 Total operating expenses. 60,800 16,000 Equipment. 21,000 Profit from operations. 9,200 Accumulated depreciation, 900 Interest income.. 6,000 4,000 equipment Interest expense. Gain on sale of long-term investment. Loss on sale of equipment. Profit before taxes.. Notes payable. Accounts payable. 2,000 5,000 3,500 10,000 9,000 3,000 4,200 Other accrued liabilities. 5,300 Interest payable. 600 400 300 10,500 300 500 Taxes payable. Income tax expense.... 2,500 Bonds payable, due in 2022 25,000 22,000 Profit. 8,000 Common shares. 16,000 14,000 Retained earnings 20,200 18,000