E Andy and Jean Crocket are involved in divorce proceedings. When discussing a property settlement, Andy told Jean that he should take over their investment in an apartment complex because she would be unable to absorb the loss that the apartments are generating, Jean was somewhat distrustful and asked Andy to support his contention. He produced the following income statement, which was supported by a CPA's unqualified opinion that the statement was prepared in accordance with generally accepted accounting principles Crocket Apartments Income Statement For the Year Ended December 31 Year 3 Rent revenue $ 580,000 8 Less: Expenses Depreciation expense 280,000 (10 Interest expense S 184,000 11 Operating expens S 88,000 12 Management fees 56,000 13 Total expen 14 Net loss $ (608,000) 128.0001 15 All revenue is earned on account. Interest and operating expenses are incurred on account. 16 Management fees are paid in cash. The following accounts and balances were drawn from the Year 2 and Year 3 year-end balance sheets, 17 18 Account Title 19 Rent receivable Interest payable 21 Accounts payable fopinating expense 22 Year 3 Year 2 44,000 $ 18,000 $ 4,000 $ 40,000 12.000 6,000 28 24 Jean is reluctant to give up the apartments but feels that she must de so because her present salary is only $40,000 per year. She says that if she takes the apartments, the $28,000 loss would absorb a significant portion of her salary, leaving her only $12,000 with which to support herself She talks you that, while the figures seem to support her husband's arguments, she believes that she is failing to L something. She knows that she and her husband collected $20,000 distribution from the business an December 1, Year 3. Also, $150,000 cash was paid in Year 3 to reduce the principal balance on a mortgage that was taken out to finance the purchase of the apartments two years ago. Finally $24,000 25 cash was paid during Year 3 to purchase a computer system uned in the business. She wonders, "The apartments are losing money, where is my husband getting all the cash to make these payments? 26 27 Required 28 Complete the statement of cash flows. Nate: Amounts to be deducted should be other answers should be input and daplays Live valuez All 30 31 Crocket Apartments 32 Statement of Cash Flows 33 For the Year Ended Dece ber 31, Yean B 34 Cash flows from operating, are lividiness For managem 56000 18,000 rchase compulan 184,000 38 Fan uporating activitiesca $16,000 39 Nel cash from operating activiti $. 1.524.000 Cash flows from mancaling activities 42 Net cash from wading birds 43 Cash Nows from financing divities 44 24,000 20000 Net cash from financing activities Net th [28.000) 51552000 40,000 $ 28,000 12,000 S 20,000 $ 150,000 S 24,000