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Question
Condensed comparative balance sheets of Breach Company at December 31, Years 1 and 2, are as follows:
| Year 2 | Year 1 | |
| Cash | $ 170,000 | $ 74,000 |
| Accounts receivable (net) | 78,000 | 85,000 |
| Inventories | 106,500 | 90,000 |
| Equipment | 395,000 | 370,000 |
| Accumulated depreciation | (195,000) | (158,000) |
| Total assets | $ 554,500 | $ 461,000 |
| Accounts payable (merchandise creditors) | $ 51,000 | $ 50,000 |
| Taxes payable | 2,500 | 5,000 |
| Common stock, $10 par | 262,000 | 230,000 |
| Retained earnings | 239,000 | 176,000 |
| Total liabilities and stockholders’ equity | $ 554,500 | $ 461,000 |
In addition, assume:
- Equipment costing $25,000 was purchased for cash and no long-term assets were sold during the period.
- Stock was issued for cash—3,200 shares at par.
- Net income for the current year was $76,000.
- Cash dividends declared and paid were $13,000.
Prepare a statement of cash flows for the year ended December 31, Year 2, using the indirect method.
Answer
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