Question

Ivanhoe Company had the following information available at the end of 2020.

IVANHOECOMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31, 2020 AND 2019
		2020			2019
Cash		$10,010			$3,990
Accounts receivable		20,570			12,850
Short-term investments		21,930			30,060
Inventory		41,700			35,280
Prepaid rent		3,000			12,030
Prepaid insurance		2,080			90
Supplies		1,010			75
Land		124,150			175,280
Buildings		349,500			349,500
Accumulated depreciation—buildings		(105,270	)		(88,250	)
Equipment		522,870			401,710
Accumulated depreciation—equipment		(130,840	)		(111,260	)
Patents		44,830			49,560
Total assets		$905,540			$870,915
Accounts payable		$21,890			$32,290
Income taxes payable		5,030			4,020
Salaries and wages payable		4,970			2,970
Short-term notes payable		9,990			9,990
Long-term notes payable		60,590			70,620
Bonds payable		400,040			400,040
Premium on bonds payable		17,390			22,175
Common stock		238,100			221,930
Paid-in capital in excess of par—common stock		25,040			17,560
Retained earnings		122,500			89,320
Total liabilities and stockholders’ equity		$905,540			$870,915

IVANHOE COMPANY INCOME STATEMENT AND DIVIDEND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue					$1,162,530
Cost of goods sold					743,150
					419,380
Gross margin
Operating expenses
Selling expenses		$79,810
Administrative expenses		156,410
Depreciation/Amortization expense		41,330
Total operating expenses					277,550
Income from operations					141,830
Other revenues/expenses
Gain on sale of land		7,970
Gain on sale of short-term investment		4,020
Dividend revenue		2,380
Interest expense		(51,610	)		(37,240	)
Income before taxes					104,590
Income tax expense					39,020
Net income					65,570
Dividends to common stockholders					(32,390	)
To retained earnings					$33,180

Prepare a statement of cash flows for Ivanhoe Company using the direct method accompanied by a reconciliation schedule. Assume the short-term investments are debt securities, classified as available-for-sale. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1