Presented below and on the next page are the comparative balance sheets for Prepare a statement of cash Lewis Company at December 31. flows—indirect method.

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LEWIS COMPANY Comparative Balance Sheets December 31 Assets 2007 2006 Cash $ 31,000 $ 57,000 Accounts receivable 77,000 64,000 Inventory 192,000 140,000 Prepaid expenses 12,140 16,540 Land 100,000 150,000 Equipment 215,000 175,000 Accumulated depreciation—equipment (70,000) (42,000)

Building 250,000 250,000 Accumulated depreciation— building (70,000) (50,000)

Total $737,140 $760,540 638 CHAPTER 12 Statement of Cash Flows Cash from operations

$48,290 Liabilities and Stockholders’ Equity Accounts payable $ 58,000 $ 45,000 Bonds payable 235,000 265,000 Common stock, $1 par 280,000 250,000 Retained earnings 164,140 200,540 Total $737,140 $760,540 Additional information: 1. Operating expenses include depreciation expense $65,000 and charges from prepaid expenses of $4,400.

. Land was sold for cash at cost.

. Cash dividends of $69,290 were paid.

. Net income for 2007 was $32,890.

. Equipment was purchased for $80,000 cash. In addition, equipment costing $40,000 with a book value of $23,000 was sold for $25,000 cash.

. Bonds were converted at face value by issuing 30,000 shares of $1 par value common stock.

wNnWhwW k oO Instructions Prepare a statement of cash flows for 2007 using the indirect method.