Prepare a statement of cash flow using direct method.

XYZ CORPORATION

Balance sheet , Dec, 31

Year 1

Year 2

Cash

$ 34,000

$ 34,500

Accounts receivable

12,000

17,000

Inventory

16,000

14,000

Investments long term

6,000

0

Fixed assets

80,000

93,000

Accumulated depreciation

48,000

39,000

Total assets

100,000

119,500

Accounts payable

19,000

12,000

Bonds payable

10,000

30,000

Common stocks

50,000

61,000

Retained earnings

21,000

28,000

Treasury stocks

0

11,500

Total liabilities and equity

100,000

119,500

Additional data

There is no dividend paid at the end of year 2.

Sales $70,000 , purchases on account $40,000,

Depreciation $5,000, expenses paid $18,000 including $4,000 interest, and $6,000 taxes.

Decrease in inventory $2,000.

Sale of fixed assets for $6,000 cash; cost $21,000, and two-thirds depreciated loss or gain is included in income

Purchase of fixed assets for cash $4,000

Fixed assets are exchanged for bonds payable of $30,000

Sale of investments for $9,000 cash

Retire bonds payable by issuing common stock, $10,000.

Sold un issued common stock for cash $1,000