XS Supply Company is developing its annual financial statements at December 31, 2010. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

Additional Data:

a. Bought equipment for cash, \($21,000.\)

b. Paid \($6,000\) on the long-term note payable.

c. Issued new shares of stock for $ 16,000 cash.

d. No dividends were declared or paid.

e. Other expenses included depreciation, \($5,000;\) wages, \($20,000;\) taxes, \($6,000;\) other, \($6,800.\) /. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

Required:

1. Prepare the statement of cash flows for the year ended December 31, 2010, using the indirect method.

2. Evaluate the statement of cash flows.

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2010 2009 Balance Sheet at December 31 Cash $ 34,000 $ 29,000 Accounts Receivable 35,000 28,000 Merchandise Inventory 41,000 38,000 Property and Equipment 121,000 100,000 Wages Payable Less: Accumulated Depreciation Accounts Payable Note Payable, Long-Term (30,000) (25,000) $201,000 $170,000 $ 36,000 $ 27,000 1,200 1,400 38,000 44,000 Contributed Capital 88,600 72,600 Retained Earnings 37,200 25,000 $201,000 $170,000 Income Statement for 2010 Sales $120,000 Cost of Goods Sold 70,000 Other Expenses 37,800 Net Income $ 12,200