Prepare a Statement of Cash Flows, Indirect Method. Glenbrook Companys most recent balance sheet, income statement, and other important information for 2020 are presented as follows.

Additional data for 2020 are as follows:

• Sold equipment with a book value of $30,000 (= $40,000 cost $10,000 accumulated depreciation) for $28,000 cash
• Purchased equipment for $96,000 cash
• There were no sales of long-term investments (Hint: Solve for the purchase of long-term investments.)
• Issued bonds for $16,000 cash
• Repurchased common stock (treasury shares) for $45,000 cash
• Declared and paid $12,000 in cash dividends

Required:

1. Use the four steps described in the chapter to prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method. Refer to the format presented in Figure 6.7 Statement of Cash Flows (Home Store, Inc.).
2. Briefly describe the major changes in cash identified in the statement of cash flows.

Assets Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses Noncurrent assets Property, plant, and equipment Accumulated depreciation Long-term investments Total assets Liabilities and owners' equity Current liabilities Accounts payable Income tax payable Noncurrent liabilities Bonds payable Owners' equity Common stock Retained earnings Total liabilities and owners' equity 2020 $139,000 75,000 113,000 9,000 761,000 (225,000) 125,000$997,000 $84,000 28,000 54,000 437,000 394,000 $997,000 2019 $185,00066,000116,0004,000705,000(188,000)74,000$962,000 $68,000 34,000 38,000 482,000340,000$962,000 Sales Cost of goods sold Gross margin Operating expenses Depreciation expense Operating income Interest expense Loss on sale of equipment Income before taxes Income tax expense Net income $640,000300,000$340,000180,00047,000$113,0005,0002,000$106,00040,00066,000