During 20X1, Jacinta Manufacturing Company (JMC) declared and paid cash dividends of $10,000. Late in the year, JMC bought new welding machinery for a cash cost of $125,000, financed partly by its first issue of long-term debt. Interest on the debt is payable annually. JMC sold several old machines for cash equal to their aggregate book value of $5,000. The company pays taxes in cash as incurred. The following data are in thousands:

Jacinta Manufacturing Company Income Statement for the Year Ended December 31, 20X1 Sales $490 Cost of sales 300 Gross margin 190 Salaries $82 Depreciation 40 Cash operating expenses 15 Interest 2 139 Income before taxes 51 Income taxes 8 Net income $ 43

OBJECTIVE 5

OBJECTIVE 5

ASSIGNMENT MATERIAL 227

Jacinta Manufacturing Company Balance Sheets

December 31 Increase 20X1 20X0 (Decrease) Assets Cash and cash equivalents $125 $ 45 $ 80 Accounts receivable 45 60 (15) Inventories 57 62 (5) Total current assets 227 167 60 Fixed assets, net 190 110 80 Total assets $417 $277 $140 Liabilities and Stockholders Equity Accounts payable $ 26 $ 21 $ 5 Interest payable 2 2 Long-term debt 100 100 Paid-in capital 220 220 Retained earnings 69 36 33 Total liabilities and stockholders equity $417 $277 $140 Prepare a statement of cash flows for 20X1. Use the direct method for reporting cash flows from operating activities. Omit supporting schedules. Assume that Jacinta paid expense items in cash unless balance sheet changes indicate otherwise.