As the controller of Lynbrook Company, you have been asked to prepare the complete Statement of Cash Flows for the year December 31, 2021. The following financial statements and additional information have been provided to you by your accounting department. Lynbrooks policy is to use the indirect method when presenting the cash flows from operations.

Lynbrook Company

Lynbrook Company Balance Sheets At December 31

2021 2020

Assets: 2021 2020 Cash $ 85,600 $ 65,200 Accounts receivable, net $ 72,850 $ 56,750 Merchandise inventory $157,750 $144,850 Prepaid expenses $6,080 $12,680 Equipment $ 280,600 $245,600 Accumulated depreciation-Equipment ($80,600) ($97,600) Total assets $522,280 $427,480 Liabilities: Accounts payable $ 52,850 $ 45,450 Income taxes payable $15,240 $12,240 Notes payable (long term) $ 59,200 $79,200 Total liabilities $127,290 $136,890 Equity: Common stock 200,000 150,000 Paid-in capital in excess of par 53,000 40,000 Retained earnings 141,990 100,590 Total equity $394,990 $290,590 Total liabilities and equity $522,280 $427,480

Lynbrook Company Income Statement

For the year ending December 31, 2021 Sales $488,000 Cost of goods sold $212,540 Depreciation expense 43,000 Other operating expenses 106,260 Interest expense 6,400 (368,200 Other gains (losses): Gain on sale of equipment 4,700 Income before taxes 124,500 Income taxes expense 41,100 Net income $ 83,400 (continued)

Additional Information a. A $20,000 note payable is retired at its carrying value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit.