Preparing and interpreting a statement of cash flows using a T-account work sheet. Financial statement data for Dickerson Manufacturing Company for the current year appear in Exhibit 4.26 .

Additional information includes the following:

(1) Net income for the year was \(\$ 568,000\); dividends declared and paid were \(\$ 60,000\).

(2) Depreciation expense for the year was \(\$ 510,000\) on buildings and machinery.

(3) The firm sold for \(\$ 25,000\) machinery originally costing \(\$ 150,000\) with accumulated depreciation of \(\$ 120,000\).
(4) The firm retired bonds during the year at their book value.

a. Prepare a statement of cash flows for Dickerson Manufacturing Company for the year using the indirect method to compute cash flow from operations. Support the statement with a \(\mathrm{T}\)-account work sheet.

b. Comment on the pattern of cash flows from operating, investing, and financing activities.

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DICKERSON MANUFACTURING COMPANY Comparative Balance Sheet EXHIBIT 4.26 (Problem 28) January 1 December 31 ASSETS Current Assets Cash Accounts Receivable Inventory Total Current Assets Noncurrent Assets Land Buildings and Machinery Less Accumulated Depreciation Total Noncurrent Assets Total Assets..... LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable Taxes Payable Other Short-term Payables Total Current Liabilities Noncurrent Liabilities Bonds Payable Total Liabilities 1,004,000 $2,308,000 $ 358,000 946,000 $ 324,000 1,052,000 1,208,000 $2,584,000 $ 594,000 8,678,000 $ 630,000 9,546,000 (3,974,000) (4,364,000) $5,298,000 $5,812,000 $7,606,000 $8,396,000 $ 412,000 $ 558,000 274,000 588,000 290,000 726,000 $1,274,000 $1,574,000 1,984,000 1,934,000 $3,258,000 $3,508,000 Shareholders' Equity Common Stock $1,672,000 $1,704,000 Retained Eamings 2,676,000 3,184,000 Total Shareholders' Equity $4,348,000 $4,888,000 Total Liabilities and Shareholders' Equity $7,606,000 $8,396,000