Financial statements for McGinnis Company as well as additional information relevant to cash flows during the period are given below.

McGinnis Company

Income Statement

For Year Ended December 31, 20-2

1	Net sales		$1,750,000.00
2	Cost of goods sold		890,000.00
3	Gross profit		$860,000.00
4	Operating expenses		590,600.00
5	Operating income		$269,400.00
6	Other revenues and expenses:
7	Interest revenue	$2,700.00
8	Interest expense	(750.00)
9	Gain on sale of office equipment	15,000.00	16,950.00
10	Income before taxes		$286,350.00
11	Income tax expense		95,000.00
12	Net income		$191,350.00

McGinnis Company

Statement of Retained Earnings

For Year Ended December 31, 20-2

1	Retained earnings, January 1, 20-2		$320,000.00
2	Net income	$191,350.00
3	Less dividends	40,000.00
4	Net increase in retained earnings		151,350.00
5	Retained earnings, December 31, 20-2		$471,350.00

McGinnis Company

Comparative Balance Sheet

December 31, 20-2 and 20-1

1			20-2		20-1	INCREASE (DECREASE)
2	Assets
3	Current assets:
4	Cash	$103,420.00		$50,520.00		$52,900.00
5	Government notes	5,400.00		16,000.00		(10,600.00)
6	Accrued interest receivable	830.00		580.00		250.00
7	Accounts receivable (net)	300,600.00		309,200.00		(8,600.00)
8	Merchandise inventory	580,300.00		495,800.00		84,500.00
9	Supplies and prepayments	65,000.00		32,000.00		33,000.00
10	Total current assets		$1,055,550.00		$904,100.00	151,450.00
11	Property, plant, and equipment:
12	Store equipment	$560,000.00		$420,000.00		140,000.00
13	Less accumulated depreciation-store equipment	120,000.00	440,000.00	90,000.00	330,000.00	30,000.00
14	Delivery equipment	$430,000.00		$330,000.00		100,000.00
15	Less accumulated depreciation-delivery equipment	150,000.00	280,000.00	120,000.00	210,000.00	30,000.00
16	Office equipment	$320,000.00		$380,000.00		(60,000.00)
17	Less accumulated depreciation-office equipment	30,500.00	289,500.00	100,500.00	279,500.00	(70,000.00)
18	Total property, plant, and equipment		1,009,500.00		819,500.00	190,000.00
19	Total assets		$2,065,050.00		$1,723,600.00	341,450.00
20	Liabilities
21	Current liabilities:
22	Notes payable	$117,000.00		$109,000.00		$8,000.00
23	Accounts payable	135,000.00		185,000.00		(50,000.00)
24	Income tax payable	25,000.00		15,000.00		10,000.00
25	Accrued and withheld payroll taxes	15,800.00		13,400.00		2,400.00
26	Accrued interest payable	900.00		1,200.00		(300.00)
27	Total current liabilities		$293,700.00		$323,600.00	(29,900.00)
28	Stockholders Equity
29	Common stock ($10 par, 400,000 shares authorized;
30	Issued: 80,000 in 20-2 and 70,000 in 20-1)	$800,000.00		$700,000.00		$100,000.00
31	Paid-in capital in excess of par-common stock	500,000.00		380,000.00		120,000.00
32	Retained earnings	471,350.00		320,000.00		151,350.00
33	Total stockholders equity		1,771,350.00		1,400,000.00	371,350.00
34	Total liabilities and stockholders equity		$2,065,050.00		$1,723,600.00	341,450.00

Additional information:

1.	Office equipment was sold in 20-2 for $35,000. Additional information on the office equipment sold is provided below.

Cost	$100,000
Accumulated depreciation	(80,000)
Book value	$20,000
Market value	35,000
Gain on sale	$15,000

2.	Depreciation expense for the year was $70,000.
3.	The following purchases were made for cash:

Store equipment	$140,000
Delivery equipment	100,000
Office equipment	32,000
	$272,000

4.	Declared and paid cash dividends of $40,000.
5.	Issued 10,000 shares of $10 par common stock for $22 per share.
6.	Acquired additional office equipment by issuing a note payable for $8,000.

Required:

Prepare a statement of cash flows explaining the change in cash and cash equivalents for the year ended December 31, 20-2.

McGinnis Company

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments for changes in current assets and liabilities related to operating activities:
4
5
6
7
8
9
10
11
12	Noncash expenses and other adjustments:
13
14
15
16	Cash flows from investing activities:
17
18
19
20
21
22	Cash flows from financing activities:
23
24
25
26
27	Cash and cash equivalents, January 1, 20-2
28	Cash and cash equivalents, December 31, 20-2
29	Schedule of Noncash Investing and Financing Activities:
30
31	Supplemental Disclosures of Cash Flow Information:
32	Cash paid for interest
33	Cash paid for income taxes