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1.)

Audio City, Inc. is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Current Year Previous Year Balance sheet at December 31 Cash Accounts Receivable Inventory Equipment Accumulated Depreciation Equipment Total Assets Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings Total Liabilities and stockholders quity Incone Statement Sales Revenue Cost of Goods sold Other Expenses Net Income $ 67,500 16,200 23,800 229.000 (64,500) $ 272,000 $ 8.300 2,000 61,500 106,000 94,200 $ 272,000 $ 71,600 21.500 21,500 153,000 (41000) $ 219,600 $ 19,600 1,000 78,000 73,000 48,000 $.219.600 $ 209,000 93,000 60.500 51.500 Additional Data: a. Bought equipment for cash, $76,000. b. Paid $16,500 on the long-term note payable, c Issued new shares of stock for $33,000 cash d. Dividends of $5,300 were paid in cash o. Other expenses included depreciation $16,500 salaries and wages, $21,500; taxes, $26,500 1. Accounts Payable includes only inventory purchases made on credit. Because a liability relating to taxes does not exist, assume that they were fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the Indirect method. (Amounts to be deducted should be indicated by a minus sign) Ook $ 51,500 AUDIO CITY INC. Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities Net Income Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Increase in Inventory Decrease in Accounts Payable Increase in Salaries and Wages Payable $ 16,500 5.300 21,800 73,300 Cash Flows from Investing Activities Cash Payments to Purchase Equipment Cash Balance, January 1 76.000 75,000 16.500 Cash Flows from Financing Activities Cash Payments on Note Payable (long-term) Cash Dividends Paid Cash Receipts from Issuing Stock 16,500 No Decrease in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 $ o