Lincoln Bike Parts , Inc. provided the following comparative balance sheets and income statement for the current year.

Balance Sheet Lincoln Bike Parts, Inc. Balance Sheets At December 31 Assets Current Year Prior Year Current Assets Cash $ 1,566,227 $ 375,960 Trading Debt Investments 445,000 615,200 Accounts Receivable-net 685,963 321,456 Merchandise Inventory 951,236 665,400 715,896 395,700 Prepaid Expenses $ Total Current Assets 4,313,826 $ 2,424,212 $ 745,960 1,846,449 $ 604,100 Noncurrent Assets Investments in Affiliate Companies Held-to-Maturity Debt Investments Property, Plant, and Equipment - net Equipment under Finance Lease - net Intangible Assets - net 410,000 11,225,750 2,700,000 9,976,210 2,550,000 622,193 220,600 930,458 145,500 Deferred Tax Asset-net $ 16,157,668 Total Noncurrent Assets 15,819,552 $ $ 20,133,378 $ 18,581,880 Total Assets Liabilities Current Liabilities $ Current Portion of Long-term Debt Accounts Payable Dividends Payable Income Taxes Payable 170,600 $ 1,375,987 587,973 489,630 494,500 1,075,987 440,123 420,159 $ Total Current Liabilities 2,624,190 $ 2,430,769 Noncurrent Liabilities $ Bonds Payable Add: Premium on Bonds Notes Payable Obligations under Finance Leases Deferred Tax Liability 2,825,000 $ 975,456 1,690,440 3,500,025 489,713 691,675 2,825,000 1,100,866 1,685,740 3,810,125 570,123 495,960 Net Obligations under Pension Plans Total Noncurrent Liabilities $ 10,172,309 $ 10,487,814 Total Liabilities $ 12,796,499 $ 12,918,583 $ 990,500 2,930,500 Shareholders' Equity Common stock, $1 par value Additional Paid-in Capital in Excess of Par-Common Additional Paid-in Capital-Stock Options Retained Earnings Accumulated other Comprehensive Income (AOCI) Total Shareholders' Equity 1,315,500 $ 3,805,500 135,470 5,666,276 (964,967) 0 3,643,039 575,158 $ 9,957,779 $ (2,620,900) Less: Treasury Stock at Cost 8,139,197 (2,475,900) 18,581,880 $ Total Liabilities and Shareholders' Equity 20,133,378 $ X i Income Statement Lincoln Bike Parts, Inc. Income Statement For the Current Year Ended December 31 Sales $ 9,440,147 5,467,890 Cost of Goods Sold $ 3,972,257 Gross Profit $ 330,960 1,075,840 22,850 166,980 150,000 52,665 $ Selling, General, and Administrative Expenses Pension Expense Bad Debt Expense Depreciation Expense Depreciation Expense - finance leases Amortization Expense - intangible assets Total Operating Expenses Operating Income Loss on Disposal of Equipment Interest Expense Interest Revenue Realized Loss on Trading Securities Equity Earnings from Affiliate Companies Income Before Tax 1,799,295 2,172,962 $ $ (198,560) (450,258) 782,596 (71,000) 1,750,489 $ 3,986,229 (1,594,492) Income Tax Expense $ 2,391,737 Net Income Additional Cash Flow Information . . . . Additional Information: Lincoln Bike Parts sold trading securities at a loss. The company sold one of its franchises at book value. The company sold plant assets with a carrying value of $1,082,560 for a loss of $198,560. The company made debt payments to reduce the current portion of long-term debt and finace lease obligations. Lincoln Bike Parts borrowed an additional $4,700 by issuing a long-term note. The change in AOCI is the result of adjustments required for the company's defined-benefit pension plan. Lincoln Bike Parts acquired additional securities classified as held to maturity. It did not purchase any other investments during the year. It did not reissue any treasury stock. Treat the trading securities as an investing activity. Ignore the amortization of the held-to-maturity investment. Assume no adjustments to fair value for trading investments. . Complete the statement one section at a time, beginning with the cash flows from operating activities. (Use a minus sign or parentheses for any numbers to be subtracted and/or for cash outflows. Lincoln Bike Parts, Inc. Statement of Cash Flows (Indirect Method) For the Year Ended December 31 Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Changes in Operating Working Capital Accounts Net Cash Provided (Used) by Operating Activities Investing Activities: Net Cash Provided (Used) by Investing Activities Financing Activities: Net Cash Provided (Used) by Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End Year Provide all required cash flow disclosures Significant Noncash Investing and Financing Activities: Accounting Policy for the Definition of Cash Equivalents: For purposes of the statement of cash flows, the company considers all debt instruments purchased with maturities of three months or less to be cash equivale Select the disclosure for significant noncash investing and financing activities. O A. The company sold $150,000 of equipment under capital lease. OB. The company sold ts franchise at book value OC. The company recognized $135,470 of stock based compensation expense. OD. None. Cash Paid for Taxes and Interest Cash Paid for Taxes Cash Paid for Interest Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Decrease in Deferred Tax Liability Decrease in Dividend Payable Decrease in Income Taxes Payable Decrease in Merchandise Inventory Decrease Prepaid Expenses Depreciation Expense - Properly, Plant, and Equipment Increase in Accounts Payable Increase in Accounts Receivable Increase in Deferred Tax Asset Increase in Deferred Tax Liability Increase in Dividend Payable Increase in Income Taxes Payable Increase in Merchandise Inventory Increase in Prepaid Expenses Loss on Disposal of Property, Plant, and Equipment Net Income Payments of Finance Lease Obligations Payments of Long-term Debt Pension Contributions Pension Expense Proceeds from Issuance of Common Stock Proceeds from Issuance of Long-term Debt Proceeds from the Sale of Franchise Proceeds from the Sale of Property, Plant, and Equipment Proceeds from the sale of Trading Debt Investments Purchases of Debt Investments - Held to Maturity Purchases of Intangible Asset Purchases of Property, Plant, and Equipment Purchase of Treasury Stock Realized Loss on Trading Securities Stock-based Compensation Expense Undistributed Equity Earnings Unrealized Gain on Trading Securities III 11 Balance Sheet Lincoln Bike Parts, Inc. Balance Sheets At December 31 Assets Current Year Prior Year Current Assets Cash $ 1,566,227 $ 375,960 Trading Debt Investments 445,000 615,200 Accounts Receivable-net 685,963 321,456 Merchandise Inventory 951,236 665,400 715,896 395,700 Prepaid Expenses $ Total Current Assets 4,313,826 $ 2,424,212 $ 745,960 1,846,449 $ 604,100 Noncurrent Assets Investments in Affiliate Companies Held-to-Maturity Debt Investments Property, Plant, and Equipment - net Equipment under Finance Lease - net Intangible Assets - net 410,000 11,225,750 2,700,000 9,976,210 2,550,000 622,193 220,600 930,458 145,500 Deferred Tax Asset-net $ 16,157,668 Total Noncurrent Assets 15,819,552 $ $ 20,133,378 $ 18,581,880 Total Assets Liabilities Current Liabilities $ Current Portion of Long-term Debt Accounts Payable Dividends Payable Income Taxes Payable 170,600 $ 1,375,987 587,973 489,630 494,500 1,075,987 440,123 420,159 $ Total Current Liabilities 2,624,190 $ 2,430,769 Noncurrent Liabilities $ Bonds Payable Add: Premium on Bonds Notes Payable Obligations under Finance Leases Deferred Tax Liability 2,825,000 $ 975,456 1,690,440 3,500,025 489,713 691,675 2,825,000 1,100,866 1,685,740 3,810,125 570,123 495,960 Net Obligations under Pension Plans Total Noncurrent Liabilities $ 10,172,309 $ 10,487,814 Total Liabilities $ 12,796,499 $ 12,918,583 $ 990,500 2,930,500 Shareholders' Equity Common stock, $1 par value Additional Paid-in Capital in Excess of Par-Common Additional Paid-in Capital-Stock Options Retained Earnings Accumulated other Comprehensive Income (AOCI) Total Shareholders' Equity 1,315,500 $ 3,805,500 135,470 5,666,276 (964,967) 0 3,643,039 575,158 $ 9,957,779 $ (2,620,900) Less: Treasury Stock at Cost 8,139,197 (2,475,900) 18,581,880 $ Total Liabilities and Shareholders' Equity 20,133,378 $ X i Income Statement Lincoln Bike Parts, Inc. Income Statement For the Current Year Ended December 31 Sales $ 9,440,147 5,467,890 Cost of Goods Sold $ 3,972,257 Gross Profit $ 330,960 1,075,840 22,850 166,980 150,000 52,665 $ Selling, General, and Administrative Expenses Pension Expense Bad Debt Expense Depreciation Expense Depreciation Expense - finance leases Amortization Expense - intangible assets Total Operating Expenses Operating Income Loss on Disposal of Equipment Interest Expense Interest Revenue Realized Loss on Trading Securities Equity Earnings from Affiliate Companies Income Before Tax 1,799,295 2,172,962 $ $ (198,560) (450,258) 782,596 (71,000) 1,750,489 $ 3,986,229 (1,594,492) Income Tax Expense $ 2,391,737 Net Income Additional Cash Flow Information . . . . Additional Information: Lincoln Bike Parts sold trading securities at a loss. The company sold one of its franchises at book value. The company sold plant assets with a carrying value of $1,082,560 for a loss of $198,560. The company made debt payments to reduce the current portion of long-term debt and finace lease obligations. Lincoln Bike Parts borrowed an additional $4,700 by issuing a long-term note. The change in AOCI is the result of adjustments required for the company's defined-benefit pension plan. Lincoln Bike Parts acquired additional securities classified as held to maturity. It did not purchase any other investments during the year. It did not reissue any treasury stock. Treat the trading securities as an investing activity. Ignore the amortization of the held-to-maturity investment. Assume no adjustments to fair value for trading investments. . Complete the statement one section at a time, beginning with the cash flows from operating activities. (Use a minus sign or parentheses for any numbers to be subtracted and/or for cash outflows. Lincoln Bike Parts, Inc. Statement of Cash Flows (Indirect Method) For the Year Ended December 31 Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Changes in Operating Working Capital Accounts Net Cash Provided (Used) by Operating Activities Investing Activities: Net Cash Provided (Used) by Investing Activities Financing Activities: Net Cash Provided (Used) by Financing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End Year Provide all required cash flow disclosures Significant Noncash Investing and Financing Activities: Accounting Policy for the Definition of Cash Equivalents: For purposes of the statement of cash flows, the company considers all debt instruments purchased with maturities of three months or less to be cash equivale Select the disclosure for significant noncash investing and financing activities. O A. The company sold $150,000 of equipment under capital lease. OB. The company sold ts franchise at book value OC. The company recognized $135,470 of stock based compensation expense. OD. None. Cash Paid for Taxes and Interest Cash Paid for Taxes Cash Paid for Interest Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities: Decrease in Deferred Tax Liability Decrease in Dividend Payable Decrease in Income Taxes Payable Decrease in Merchandise Inventory Decrease Prepaid Expenses Depreciation Expense - Properly, Plant, and Equipment Increase in Accounts Payable Increase in Accounts Receivable Increase in Deferred Tax Asset Increase in Deferred Tax Liability Increase in Dividend Payable Increase in Income Taxes Payable Increase in Merchandise Inventory Increase in Prepaid Expenses Loss on Disposal of Property, Plant, and Equipment Net Income Payments of Finance Lease Obligations Payments of Long-term Debt Pension Contributions Pension Expense Proceeds from Issuance of Common Stock Proceeds from Issuance of Long-term Debt Proceeds from the Sale of Franchise Proceeds from the Sale of Property, Plant, and Equipment Proceeds from the sale of Trading Debt Investments Purchases of Debt Investments - Held to Maturity Purchases of Intangible Asset Purchases of Property, Plant, and Equipment Purchase of Treasury Stock Realized Loss on Trading Securities Stock-based Compensation Expense Undistributed Equity Earnings Unrealized Gain on Trading Securities III 11