Prepare a Statement of Cash Flows, Indirect Method. Madison, Inc.s most recent balance sheet, income statement, and other important information for 2017 are presented as follows.

Additional data for 2017 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:

Use the four steps described in the chapter to prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method. Refer to the format presented in Figure 12.8.

Briefly describe the major changes in cash identified in the statement of cash flows. Figure 12.8

Madison, Inc. Balance Sheet December 31,2017 and December 31, 201 2017 2016 Assets Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses 139,000 75,000 113,000 9,000 $ 185,000 66,000 116,000 4,000 Noncurrent assets Property, plant, and equipment Accumulated depreciation Long-term investments 761,000 (225,000) 125,000 $997,000 705,000 (188,000) 74,000 $962,000 Total assets Liabilities and owners' equity Current liabilities $ 84,000 28,000 $68,000 34,000 Accounts payable Income tax payable Bonds payable Common stock Noncurrent liabilities 54,000 38,000 Owners' equity 437,000 394,000 $997,000 482,000 340,000 $962,000 Retained earnings Total liabilities and owners' equity Madison, Inc. Balance Sheet December 31,2017 and December 31, 201 2017 2016 Assets Current assets Cash Accounts receivable Merchandise inventory Prepaid expenses 139,000 75,000 113,000 9,000 $ 185,000 66,000 116,000 4,000 Noncurrent assets Property, plant, and equipment Accumulated depreciation Long-term investments 761,000 (225,000) 125,000 $997,000 705,000 (188,000) 74,000 $962,000 Total assets Liabilities and owners' equity Current liabilities $ 84,000 28,000 $68,000 34,000 Accounts payable Income tax payable Bonds payable Common stock Noncurrent liabilities 54,000 38,000 Owners' equity 437,000 394,000 $997,000 482,000 340,000 $962,000 Retained earnings Total liabilities and owners' equity