Year-End Balance Sheet and Statement of Cash Flows—Indirect Method The balance sheet of Terrier Company at the end of 2009 is presented here, along with certain other information for 2010:

December 31, 2009 Cash $ 140,000 Accounts receivable 155,000 Total current assets $ 295,000 Land $ 300,000 Plant and equipment 500,000 Accumulated depreciation (150,000)
Investments 100,000 Total long-term assets $ 750,000 Total assets $1,045,000 Current liabilities $ 205,000 Bonds payable $ 300,000 Common stock $ 400,000 Retained earnings 140,000 Total stockholders’ equity $ 540,000 Total liabilities and stockholders’ equity $1,045,000.

Other information is as follows:

a. Net income for 2010 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 fl ows for 2010 using the indirect method in the Operating Activities section. Include a supplemental schedule for noncash activities.
2. Prepare a balance sheet at December 31, 2010.
3. Provide a possible explanation as to why Terrier decided to issue additional bonds for cash during 2010.AppendixLO1