Preparing a statement of cash flows. (Adapted from CPA examination.) Exhibit 13.10 presents a comparative statement of financial position for Biddle Corporation as of December 31, Year 1 and Year 2. Exhibit 13.11 presents an income statement for Year 2. Additional information follows:

(1) On February 2, Year 2, Biddle issued a 10-percent stock dividend to shareholders of record on January 15, Year 2. The market price per share of the common stock on February 2, Year 2, was \(\$ 15\).

(2) On March 1, Year 2, Biddle issued 1,900 shares of common stock for land. The common stock and land had current market values of approximately \(\$ 20,000\) on March 1, Year 2.

(3) On April 15, Year 2, Biddle repurchased long-term bonds with a face and book value of \(\$ 25,000\). It reported a gain of \(\$ 6,000\) on the income statement.

(4) On June 30, Year 2, Biddle sold equipment costing \(\$ 26,500\), with a book value of \(\$ 11,500\), for \(\$ 9,500\) cash.

(5) On September 30, Year 2, Biddle declared and paid a \(\$ 0.04\) per share cash dividend to shareholders of record on August 1, Year 2.
(6) On October 10, Year 2, Biddle purchased land for \(\$ 42,500\) cash.
(7) Deferred income taxes represent timing differences relating to the use of different depreciation methods for income tax and financial statement reporting.

a. Prepare a T-account work sheet for the preparation of a statement of cash flows.

b. Prepare a formal statement of cash flows for Biddle Corporation for the year ended December 31, Year 2.

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EXHIBIT 13.11 BIDDLE CORPORATION Income Statement for the Year Ended December 31, Year 2 (Problem 12] Sales Gain in Repurchase of Bonds Total Revenues Expenses: Cost of Goods Sold Salary and Wages Depreciation Patent Amortization Loss on Sale of Equipment Interest Miscellaneous Total Expenses Income before Income Taxes Income Taxes Current Deferred Provision for Income Taxes Net Income Earnings per Share $500,000 6,000 $506,000 $280,000 95,000 10,000 1,500 2,000 8,000 4,000 $400,500 $105,500 $ 25,000 20,000 $ 45,000 $ 60,500 $2.45