Gazelle Corporation, a merchandiser, recently completed its calendar-year 2016 operations. For the year,
(1) All sales are credit sales,
(2) All credits to Accounts Receivable reflect cash receipts from customers,
(3) All purchases of inventory are on credit,
(4) All debits to Accounts Payable reflect cash payments for inventory, and
(5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheets and income statement follow.
GAZELLE CORPORATION
Comparative Balance Sheets
December 31, 2016 and 2015

GAZELLE CORPORATION
Income Statement
For Year Ended December 31, 2016

Additional Information on Year 2016 Transactions
a. The loss on the cash sale of equipment was $2,100 (details in b).
b. Sold equipment costing $51,000, with accumulated depreciation of $22,850, for $26,050 cash.
c. Purchased equipment costing $113,250 by paying $43,250 cash and signing a long-term note payable for the balance.
d. Borrowed $5,000 cash by signing a short-term note payable.
e. Paid $47,500 cash to reduce the long-term notes payable.
f. Issued 3,000 shares of common stock for $15 cash per share.
g. Declared and paid cash dividends of $53,600.
Required
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. Disclose any noncash investing and financing activities in a note.
Analysis Component
2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment?

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2016 2015 Assets Cash.. Accounts receivable... .. . $123,450 61,550 80,750 15.100 17,000 Total current assets... Equipment 262,250 (110,750) (95,000) Total assets. ...$607.70 $515,000 Liabilities and Equity Accounts payable... Short-term notes payable Total current liabilities Long-term notes payable Total liabilities 15,000 10,000 77,500 .. . 32,750 189,500 Equity Common stock, $5 par Paid-in capital in excess of par .215,000 30,000 Total liabilities and equity $607.750 $515,000 Cost of goods sold... Gross profit Operating expenses $1,185,000 595,000 590,000 Depreciation expense Other expenses... Total operating expenses. ...$38,600 362,850 401,450 188,550 Other gains (losses) (2,100) 186,450 28.350 $ 158,100 Income before taxes Net income .