On the basis of the following data for Garrett Co. for years 1 and 2 ended December 31. 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.

Prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities.

2 Cash 3 Accounts receivable (net) 4 Inventories 5 Equipment 6 Accumulated depreciation-equipment 8 Accounts payable (merchandise creditors) 9 Cash dividends payable 10 Common stock, $10 par 11 Paid-in capital in excess of par-common stock Retained eamings $90,000.00 ST800000 85,00000 78,000.00 106,500.00 90,00000 410,000.00 370,000.00 (150,000.00) (158,000.00) $534,500.00 $465,000.00 $53,500.00 $55,000.00 4000000 5,000.00 170,000.00 200,000.00 60,000.00 62,000.00 214,000.00 17600000 $534,500 00 $465,000.00