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.

Total assets

Lynbrook Company Balance Sheets At December 31

2021

2020

Assets:

Cash

$ 85,600

$ 65,200

Accounts receivable, net

72,850

56,750

Merchandise inventory

Equipment

157,750

144,850

Prepaid expenses

6,080

12,680

280,600

245,600

Accumulated depreciation-Equipment

(80,600)

(97,600)

$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

Paid-in capital in excess of par

Retained earnings

200,000

150,000

53,000

40,000

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.