The management of Banciu Corporation provides you with comparative balance sheets at December 31, 20X1, and December 31, 20X0, appearing below.

Supplemental Information:

a. The following table presents a comparative analysis of retained earnings as of December 31, 20X1, and December 31, 20X0.

b. On December 10, 20X1, the board of directors declared a cash dividend of $0.24 per share, payable to holders of common stock on January 10, 20X2.

c. Purchased new machinery for $463,000. In addition, Banciu sold certain machinery it was no longer using for $57,600. The machinery cost $127,000 and had accumulated depreciation of $53,800 at the date of the sale. Banciu made no other entries in Machinery and equipment or related accounts other than for depreciation.

d. Purchased 120 preferred shares, par value $100, at $110 and subsequently canceled the shares. Banciu debited the premium paid to Retained earnings.

e. Paid $2,400 of legal costs in successful defense of a new patent, which it correctly debited to the Patents account. It recorded patent amortization amounting to $5,040 during the year ended December 31, 20X1.

f. During 20X1, Banciu wrote off accounts receivable totaling $3,600 as uncollectible.

g. During 20X1, Banciu purchased $180,000 of securities that are being held for future plant expansion.

Required:

1. Prepare the entries (in general journal form) that would be entered into T-accounts needed to prepare a statement of cash flows from the data given. For example, the first entry would be

DR Cash (Operations—Net income) ...................................................... $234,000
CR Retained earnings ................................................................................................ $234,000

2. Prepare a statement of cash flows for Banciu Corporation for 20X1. Use the indirect method for presenting cash flow from operations.

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December 31, 20X1 20X0 Assets $ 174,000 306,000 (19,200) 579,600 Cash $ 223,200 Accounts receivable 327,600 Allowance for uncollectible accounts (20,400) 645,600 776,400 Inventories Machinery and equipment Accumulated depreciation on machinery and equipment Leasehold improvements Accumulated amortization on leasehold improvements Securities held for plant expansion Patents 1,112,400 (499,200) (446,400) 104,400 104,400 (69,600) 180,000 33,360 (58,800) -0- 36,000 Totals $1,901,760 $1,587,600 Liabilities and stockholders' equity Accounts payable Dividend payable Current portion of 6% serial bonds payable 6% serial bonds payable-noncurrent portion Preferred stock $ 279,360 48,000 60,000 $ 126,000 -0- 60,000 300,000 360,000 120,000 600,000 321,600 108,000 Common stock 600,000 506,400 Retained earnings Totals $1,901,760 $1,587,600