#3 (10 Points) - Part A Comparative Balance Sheet Data for Waves Incorporated for two recent years appear below: Waves Incorporated Balance Sheets For the Years Ended December 31, 2019 and 2018 Operating Activities: Adjustments to Net Income to Convert to Cash Basis: Assets 2019 2018 Increase (Decrease) Cash $108,000 $84,000 24,000 Accounts receivable 34,000 160,000 (126,000) Inventory 70,000 60,000 10,000 Prepaid expense 16,000 20,000 (4,000) Land 400,000 300,000 100,000 Buildings 320,000 260,000 60,000 Accumulated depreciation (182,000) (140,000) 42,000 Patents (net) 42.000 50.000 (8,000) $808,000 $794,000 Total assets Net Cash Flow from Operating Activities Investing Activities Liabilities and Equity Accounts payable $148,000 $174,000 (26,000) Accrued liabilities 120,000 150,000 (30,000) Bonds payable 200,000 280,000 (80,000) Common stock, $10 par 216,000 116,000 100,000 Retained earnings 124,000 74,000 50,000 Net Cash by Investing Activities $808,000 $794,000 Total Liabilities and Equity Financing Activities Additional data: THE ITEMS BELOW ARE PROPERLY REFLECTED IN THE BALANCE SHEETS ABOVE 1. Land was acquired by issuing common stock, $100,000. 2. Net income for the period was calculated to be $60,000. 3. Cash dividends were declared and paid, $10,000. 4. Amortization of the patent for the year, $8,000. 5. Retired bonds payable for $80,000. 6. Purchased a building for $60,000. 7. Depreciation on the building for the year, $42,000. Required: Prepare a Statement of Cash Flows for 2019 using the Indirect Method. Show all work on the next page and use the format provided!! $ S Net Cash by Financing Activities $ Net in Cash $ Add: Beginning Cash Balance + 84.000 Ending Cash Balance $ 108.000 Schedule of Noncash Investing and Financing Activities (Continued) Part B (5 Points) The following questions relate to Waves Corporation 1. There was a decrease in accounts receivable of $126,000. Assume sales were up this year from last year. Is this a good or bad sign? Explain: 2. There was a decrease in accounts payable of $26,000. Is this a good or bad sign? Explain: 3. The company purchased a building for $60,000. or bad sign? Explain: Is this a good 4. The company retired bonds of $80,000. Is this a good or bad Explain: sign? 5. The company acquired land through the issuance of common stock. Is this a good or bad sign? Explain