Statement of cash flows—indirect method OBJ. 2 The comparative balance sheet of Harris Industries Inc. at December 31, 2016 and 2015, is as follows:

Dec. 31, 2016 Dec. 31, 2015 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 443,240 $ 360,920 Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,280 592,200 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887,880 1,022,560 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,640 25,200 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302,400 302,400 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,713,600 1,134,000 Accumulated depreciation—buildings . . . . . . . . . . . . . . . . . . . . . (466,200) (414,540)

Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781,200 781,200 Accumulated depreciation—machinery and equipment . . . . . (214,200) (191,520)

Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,960 112,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,251,800 $3,724,420 Liabilities and Stockholders’ Equity Accounts payable (merchandise creditors) . . . . . . . . . . . . . . . . . . . $ 837,480 $ 927,080 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,760 25,200 Salaries payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,960 87,080 Mortgage note payable, due 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . 224,000 0 Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 390,000 Common stock, $5 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,400 50,400 Paid-in capital: Excess of issue price over par—common stock . . . . . . . 366,000 126,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,512,200 2,118,660 Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . $4,251,800 $3,724,420 An examination of the income statement and the accounting records revealed the following additional information applicable to 2016:

a. Net income, $524,580.

b. Depreciation expense reported on the income statement: buildings, $51,660; machinery and equipment, $22,680.

c. Patent amortization reported on the income statement, $5,040.

d. A building was constructed for $579,600.

e. A mortgage note for $224,000 was issued for cash.

f. 30,000 shares of common stock were issued at $13 in exchange for the bonds payable.
g. Cash dividends declared, $131,040.
Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.