Prepare a Statement of Cash Flows for Kitten Mittens on the following page for the year ended December 31, 2004. Use the indirect method to calculate cash flows from operations.

The Balance sheet and Income Statement for "KittenMittens" for the year ending December 31, 2004, are

as follows:

Kitten Mittens Comparative Balance Sheets

Assets

December 31, 2003 December 31, 2004

Current Assets:

Cash and cash equivalents	$130,000	$189,000
Accounts Receivable, net	420,000	471,000
Inventory 530.000 642,000
Total Current Assets	1,080,000	1,302,000
Land	242,500	321,000
Property &Equipment - at cost	750,000	999,000
Less Accumulated depreciation	(425,000)	(546,000)
Net Property & Equipment	325,000	453,000
Total Assets	$1,647,500	$2,076,000

Liabilities and Equity

Current Liabilities :

Accounts payable - trade	$195,000	$249,000
Interest Payable	20,000	21,000
Total Current Liabilities	215,000	270,000
Note Payable	250,000	240,000
Common Stock	875,000	1,125,000
Retained Earnings	307,500	441,000

Total Liabilities and Stockholders' Equity $1,647,500 $2,076,000

QUESTION CONTINUES ON FOLLOWING PAGE

Kitten Mittens

Income Statement

For year ended December 31, 2004

Revenues Expenses		$2,400,000
Cost of Goods Sold	1,354,000
Wages and Salaries Expense	320,000
Depreciation Expense	190,000
Interest Expense	12,000
Income Tax Expense Total	65,000	(1,941,000)
Less: Loss on Sale of Equipment		(38,000)
Net Income		$421,000
Other available information:

- Kitten Mittens purchased $500,000 of new equipment during 2004. The new equipment replaced old equipment,whichwassoldfor$144,000 in cash. As indicated on the income statement, the sale of equipment resulted in a loss of $38,000.

- Dividends were declared and paid to common stockholders during the year.

- No new debt was issued and no land was sold during 2004.

Required:

Prepare a Statement of Cash Flows for Kitten Mittens on the following page for the year ended December 31, 2004. Use the indirect method to calculate cash flows from operations.