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

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.

Instructions

Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)

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Brecker Inc. Comparative Balance Sheet As of December 31, 2020 and 2019 12/31/20 12/31/19 $ 6,000 $ 7,000 Cash Accounts receivable 62,000 51,000 Short-term debt investments (available-for-sale) 35,000 18,000 Inventory 40,000 60,000 Prepaid rent Equipment Accumulated depreciation-equipment Copyrights 5,000 4,000 130,000 154,000 (35,000) (25,000) 46,000 50,000 Total assets $313,000 $295,000 Accounts payable Income taxes payable Salaries and wages payable Short-term loans payable Long-term loans payable Common stock, $10 par Contributed capital, common stock Retained earnings $ 46,000 $ 40,000 4,000 6,000 8,000 4,000 8,000 10,000 60,000 69,000 100,000 100,000 30,000 30,000 57,000 $313,000 36,000 Total liabilities and stockholders' equity $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 Operating expenses 163,150 120,000 Operating income Interest expense 43,150 $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