Case 1: (8 Marks)

Presented below are the comparative December 31 financial statements for Abu Dhabi Industries, Inc. (in $ Millions). Prepare a statement of cash flows for December 31, Year 3 using the indirect method.

Martin Industries, Inc

Balance Sheets

At December 31, Year 2 and Year 1

	Year 3	Year 2
Cash	$96,719	$28,694
Accounts Receivable	100,000	85,313
Inventory	206,250	181,250
Prepaid Insurance	1,875	2,500
Land, Buildings, and Equipment	1,562,500	1,406,250
Accumulated Depreciation	(762,500)	(715,000)
Investments	19,375	106,250
Total Assets	$1,224,219	$1,095,256
Accounts Payable	$95,425	$185,838
Salaries Payable	25,000	30,625
Notes Payable	31,250	93,750
Bonds Payable	250,000	-
Common Stock	375,000	375,000
Retained Earnings	447,544	410,044
	$1,224,219	$1,095,256

Additional information for Year 2

(1) Sold available for sale securities costing $86,875 for $92,500.

(2) Equipment costing $25,000 with a book value of $6,250 was sold for $7,500

(3) Issued 8% bonds at face value for $250,000.

(4) Purchased new equipment for $181,250 and paid cash.

(5) Paid cash dividends of $25,000.

(6) Net income was $62,500.