Following are the data for Larson Co. for the year ending December 31 Year 2, and the preceding year ended December 31 Year 1 and the indirect method of reporting cash flows from operating activities. In addition to the balance sheet data, assume that:

	Equipment costing $125,000 was purchased for cash.
	Equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000.
	The stock was issued for cash.

The only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.

1

Year 2

Year 1

2

Cash

$100,000.00

$78,000.00

3

Accounts receivable (net)

78,000.00

85,000.00

4

Inventories

101,500.00

90,000.00

5

Equipment

410,000.00

370,000.00

6

Accumulated depreciation

(150,000.00)

(158,000.00)

7

$539,500.00

$465,000.00

8

Accounts payable (merchandise creditors)

$58,500.00

$55,000.00

9

Cash dividends payable

5,000.00

4,000.00

10

Common stock, $10 par

200,000.00

170,000.00

11

Paid-in capital in excess of parcommon stock

62,000.00

60,000.00

12

Retained earnings

214,000.00

176,000.00

13

$539,500.00

$465,000.00

Required:

On the basis of the following data, prepare a statement of cash flows. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash out flow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.