1. On the basis of the following data for Garrett Co. for Years 1 and 2 ended December 31, prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were for net income of $56,000 and cash dividends declared of $18,000.

   	Year 2	Year 1
   Assets
   Cash	$ 90,000	$78,000
   Accounts receivable (net)	78,000	85,000
   Inventories	106,500	90,000
   Equipment	410,000	370,000
   Accumulated depreciation	(150,000)	(158,000)
   Total assets	$534,500	$465,000
   Liabilities and Stockholders' Equity
   Accounts payable (merchandise creditors)	$ 53,500	$55,000
   Cash dividends payable	5,000	4,000
   Common stock, $10 par	200,000	170,000
   Paidin capital in excess of parcommon stock	62,000	60,000
   Retained earnings	214,000	176,000
   Total liabilities and stockholders' equity	$534,500	$465,000

   Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

   Garrett Co.
   Statement of Cash Flows
   For the Year Ended December 31, Year 2
   Cash flows from operating activities:
   	$fill in the blank 2
   Adjustments to reconcile net income to net cash flow from operating activities:
   	$fill in the blank 4
   	fill in the blank 6
   Changes in current operating assets and liabilities:
   	fill in the blank 8
   	fill in the blank 10
   	fill in the blank 12
   Net cash flow from operating activities		$fill in the blank 13
   Cash flows from investing activities:
   	$fill in the blank 15
   	fill in the blank 17
   Net cash flow used for investing activities		fill in the blank 18
   Cash flows from financing activities:
   	$fill in the blank 20
   	fill in the blank 22
   Net cash flow provided by financing activities		fill in the blank 23
   		$fill in the blank 25
   Cash at the beginning of the year		fill in the blank 26
   Cash at the end of the year		$fill in the blank 27