Year-End Balance Sheet and Statement of Cash Flows—Indirect Method The balance sheet of Terrier Company at the end of 2007 is presented here, along with certain other information for 2008:

Other information is as follows:

a. Net income for 2008 was $70,000.

b. Included in operating expenses was $20,000 in depreciation.

c. Cash dividends of $25,000 were declared and paid.

d. An additional $150,000 of bonds was issued for cash.

e. Common stock of $50,000 was purchased for cash and retired.

f. Cash purchases of plant and equipment during the year were $200,000.
g. An additional $100,000 of bonds was issued in exchange for land.
h. During the year, sales exceeded cash collections on account by $10,000. All sales are on account.
i. The amount of current liabilities remained unchanged during the year.
Required 1. Prepare a statement of cash flows for 2008 using the indirect method in the Operating Activities section. Include a supplemental schedule for noncash activities.
2. Prepare a balance sheet at December 31, 2008.
3. Provide a possible explanation as to why Terrier decided to issue additional bonds for cash during 2008.

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Cash Accounts receivable Total current assets Land Plant and equipment Accumulated depreciation Investments Total long-term assets Total assets Current liabilities Bonds payable Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity December 31, 2007 $ 140,000 155,000 $ 295,000 $ 300,000 500,000 (150,000) 100,000 $ 750,000 $1,045,000 $ 205,000 $ 300,000 $ 400,000 140,000 $ 540,000 $1,045,000