(SCF—Indirect Method) You have completed the field work in connection with your audit of Texas Hold Em Corporation for the year ended December 31, 2008. The balance sheet accounts at the beginning and end of the year are shown on the next page.

Instructions Problems From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or skeleton ledger accounts.

Increase Dec. 31, 2008 Dec. 31, 2007 or (Decrease) Cash Accounts receivable $ 267,900 479,424 $ 298,000 ($30,100) 353,000 126,424 Inventory 741,700 610,000 131,700 Prepaid expenses 12,000 8,000 4,000 Investment in subsidiary 110,500 -0- 110,500 Cash surrender value of life insurance 2,304 1,800 504 Machinery 207,000 190,000 17,000 Buildings 535,200 407,900 127,300 Land 52,500 52,500 -0- Patents 69,000 64,000 Copyright 40,000 50,000 Bond discount and expense 4,502 $2,522,030 -0- $2,035,200 Accrued taxes payable Accounts payable Dividends payable Bonds payable-8% Bonds payable-12% Allowance for doubtful accounts Accumulated depreciation-buildings Accumulated depreciation-machinery Premium on bonds payable 299,280 70,000 125,000 -0- -0- 1,176,200 $ 90,250 125,000 100,000 (100,000) 35,300 40,000 (4,700) 424,000 400,000 24,000 173,000 130,000 43,000 Capital stock-no par 2,400 1,453,200 (2,400) (277,000) Additional paid-in capital Retained earnings-unappropriated 109,000 20,000 -0- 109,000 (450,000) 470,000 $2,522,030 $2,035,200 $486,830 $ 79,600 280,000 -0- -0- 5,000 (10,000) 4,502 $486,830 $ 10,650 19,280 70,000