LINES IN THE STATEMENT OF CASHFLOWS MAY NOT BE FULLY CORRECT. PLEASE CORRECT IF NEED BE

PB12-3 (Algo) Preparing a Statement of Cash Flows (Indirect Method) (LO 12-2, LO 12-3, LO 12-4, LO 12- 5) Audio City, Incorporated, 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 Notes Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Sales Revenue Cost of Goods Sold Other Expenses Net Income $ 35, 200 11,000 16,000 203,000 (45,000) $ 220,200 $ 7,000 2,200 55,000 80,000 76,000 $ 220,200 $ 43,000 15,000 15,000 140,000 (35,000) $ 178,000 $ 17,000 1,000 65,000 60,000 35,000 $ 178,000 $ 170,000 80,000 45,000 $ 45,000 Additional Data: a. Bought equipment for cash, $63,000. b. Paid $10,000 on the long-term notes payable. c. Issued new shares of stock for $20,000 cash. d. Dividends of $4,000 were paid in cash. e. Other expenses included depreciation, $10,000; salaries and wages, $15,000; taxes, $20,000. f. 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.) AUDIO CITY INCORPORATED 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: $ 45,000 Changes in Current Assets and Current Liabilities Depreciation Expense Decrease in Accounts Receivable Increase in Inventory Decrease in Accounts Payable Decrease in Salaries and Wages Payable Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Cash Payments to Purchase Equipment 0 45,000 0 Net Cash Provided by Investing Activities Cash Flows from Financing Activities: Cash Payments on Notes Payable (long-term) Cash Dividends Paid Cash Receipts from Issuing Stock 0 Net Cash Provided by Financing Activities Net Increase in Cash during the Year Cash Balance, January 1 Cash Balance, December 31 $ 0