Preparing a Statement of Cash FlowsIndirect Method

Label Corporations recent comparative balance sheets and income statement, along with additional information follow.

Additional information 1. Wrote o $2,000 accounts receivable as uncollectible. 2. Sold a xed asset for $16,000 cash (cost, $60,000; accumulated depreciation, $36,000). 3. Issued common stock for $20,000 cash. 4. Declared and paid a cash dividend, $20,000. 5. Purchased land, $80,000 cash. 6. Acquired land for $84,000 and issued common stock as payment in full. 7. Acquired xed assets, cost $64,000; issued a $64,000, three-year, interest-bearing note payable. 8. Paid a $40,000 long-term note installment by issuing common stock to the creditor. 9. Borrowed cash on long-term note, $80,000.

Required

Prepare a current year statement of cash flows using the indirect method to report cash flows from operating activities. Note: Include a negative sign (-) for any amount that would be subtracted in the statement of cash flows.

Balance Sheets, December 31 Prior Year Current Year \begin{tabular}{|l|r|r|} \hline Assets & & \\ \hline Cash and cash equivalents & $60,000 & $124,000 \\ \hline Accounts receivable & 120,000 & 114,000 \\ \hline Allowance for doubtful accounts & (6,000) & (8,000) \\ \hline Inventory & 40,000 & 60,000 \\ \hline Prepaid insurance & 9,600 & 5,600 \\ \hline Fixed assets & 320,000 & 324,000 \\ \hline Accumulated depreciation & (80,000) & (64,000) \\ \hline Land & 160,400 & 324,400 \\ \hline Total assets & $624,000 & $880,000 \\ \hline Liabilities and Stockholders' Equity & & \\ \hline Accounts payable & $40,000 & $44,000 \\ \hline Salaries payable & 8,000 & 4,000 \\ \hline Interest payable & - & 4,000 \\ \hline Notes payable, long-term & 80,000 & 184,000 \\ \hline Common stock, no-par & 400,000 & 544,000 \\ \hline Retained earnings & 96,000 & 100,000 \\ \hline Total liabilities and stockholders' equity & $624,000 & $880,000 \\ \hline \end{tabular} \begin{tabular}{|l|r|} \hline IncomeStatement,ForYearendedDecember & \multicolumn{1}{c|}{CurrentYear} \\ \hline Sales revenue & $320,000 \\ \hline Cost of goods sold & (140,000) \\ \hline Depreciation expense & (20,000) \\ \hline Bad debt expense & (4,000) \\ \hline Insurance expense & (4,000) \\ \hline Interest expense & (4,000) \\ \hline Salaries expense & (12,000) \\ \hline Income tax expense & \\ \hline Other expenses, including loss & \\ \hline on sale of fixed assets & (60,000) \\ \hline Net income & $24,000 \\ \hline \hline \end{tabular}