The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

a. Net income, $250,000.

b. Depreciation reported on the income statement, $135,000.

c. Equipment was purchased at a cost of $420,000 and fully depreciated equipment costing $90,000 was discarded, with no salvage realized.

d. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.

e. 30,000 shares of common stock were issued at $20 for cash.

f. Cash dividends declared and paid, $45,000.

Instructions

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

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Dec. 31, 20Y8 Dec. 31, 20Y7 Assets $ 95,000 $ 110,000 Cash .... Accounts receivable (net) 260,000 280,000 Inventories ... 520,000 450,000 Prepaid expenses 5,000 15,000 Equipment...... Accumulated depreciation-equipment Total assets ... 1,130,000 800,000 (235,000) $1,785,000 (190,000) $1,455,000 Liabilities and Stockholders' Equity $ 100,000 $ 75,000 Accounts payable (merchandise creditors) Mortgage note payable....... Common stock, $10 par... Paid-in capital in excess of par-common stock . Retained earnings....... Total liabilities and stockholders' equity.. 500,000 500,000 200,000 400,000 100,000 785,000 $1,785,000 580,000 $1,455,000