Below are Sullivan Corp.'s comparative balance sheet accounts at December 31, 2020 and 2019,

	2020	2019	Increase (Decrease)
Cash	$ 815,000	$ 700,000
Accounts receivable	1,128,000	1,168,000
Inventory	1,850,000	1,715,000
Property, plant, and equipment	3,307,000	2,967,000
Accumulated depreciation	(1,165,000)	(1,040,000)
Investment in Myers Co.	310,000	275,000
Loan receivable	250,000	—
Total assets	$6,495,000	$5,785,000
Accounts payable	$1,015,000	$ 955,000
Income taxes payable	30,000	50,000
Dividends payable	80,000	100,000
Lease liability	400,000	—
Common stock, $1 par	500,000	500,000
Paid-in capital in excess of par - common	1,500,000	1,500,000
Retained earnings	2,970,000	2,680,000
Total liabilities and stockholders' equity	$6,495,000	$5,785,000

Additional information:

On December 31, 2019, Sullivan acquired 25% of Myers Co.'s common stock for $275,000. On that date, the carrying value of Myers's assets and liabilities, which approximated their fair values, was $1,100,000. Myers reported income of $140,000 for the year ended December 31, 2020. No dividend was paid on Myers's common stock during the year.
During 2020, Sullivan loaned $300,000 to TLC Co., an unrelated company. TLC made the first semiannual principal repayment of $50,000, plus interest at 10%, on December 31, 2020.
On 1/2/2020, Sullivan sold equipment costing $60,000 (adj basis $38,000) for $40,000 cash.
On December 31, 2020, Sullivan entered into a capital lease for an office building. The present value of the annual rental payments is $400,000, which equals the fair value of the building. Sullivan made the first rental payment of $60,000 when due on January 2, 2021.
Net income for 2020 was $370,000.
Sullivan declared and paid the following cash dividends for 2020 and 2019.

2020 2019

$80,000 $100,000

Declared 12/15/2020 12/15/2019

Paid 2/28/2021 2/28/2020

Required: Prepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2020, using the indirect method.

Expert Solution

Prepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2020, using the indirect method.

Refer to the below images for the above mentioned requirement, in a detailed way of solution with calculations.

ekkarill92 answered 2 years ago

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