Presented below are the balance sheet accounts of Kern, Inc., as of December 31, Year 2 and Year 1, and their net changes.

	Year 2	Year 1	Net Change
Assets
Cash	$ 471,000	$ 307,000	$ 164,000
Trading securities, at cost	150,000	250,000	(100,000)
Securities fair value adjustment (trading)	(10,000)	(25,000)	15,000
Accounts receivable, net	550,000	515,000	35,000
Inventories	810,000	890,000	(80,000)
Investments in Word Corp., at equity	420,000	390,000	30,000
Property, plant, and equipment	1,145,000	1,070,000	75,000
Accumulated depreciation	(345,000)	(280,000)	(65,000)
Patent, net	109,000	118,000	(9,000)
Total assets	$3,300,000	$3,235,000	$ 65,000
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Liabilities and Shareholders Equity
Accounts payable and accrued liabilities	$ 845,000	$ 960,000	$(115,000)
Note payable, noncurrent	600,000	900,000	(300,000)
Deferred income taxes	190,000	190,000	---
Common stock, $10 par value	850,000	650,000	200,000
Additional paid-in capital	230,000	170,000	60,000
Retained earnings	585,000	365,000	220,000
Total liabilities and stockholders equity	$3,300,000	$3,235,000	$ 65,000
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Additional Information:

On January 2, Year 2, Kern sold equipment costing $45,000, with a carrying amount of $28,000, for $18,000 cash.

On March 31, Year 2, Kern sold one of its trading security holdings for $119,000 cash. Cash flows from purchases, sales, and maturities of Kerns trading securities are from investing activities. No other transactions involved trading securities.

On April 15, Year 2, Kern issued 20,000 shares of its common stock for cash at $13 per share.

On July 1, Year 2, Kern purchased equipment for $120,000 cash.

Kerns net income for Year 2 is $305,000. Kern paid a cash dividend of $85,000 on October 26, Year 2.

Kern acquired a 20% interest in Word Corp.s common stock during Year 1. There was no goodwill attributable to the investment, which is appropriately accounted for by the equity method. Word reported net income of $150,000 for the year ended December 31, Year 2. No dividend was paid on Words common stock during Year 2.

For the following operating cash flow items, enter in the designated cells the amounts that will be reported in Kerns statement of cash flows. Indicate negative numbers by using a leading minus (-) sign.

Cash flows from operating activities:	Amount
Net income	$305,000
Adjustments to reconcile net income to net cash provided by operating acitvities:
1. Depreciation
2. Amortization of patent
3. Loss on sale of equipment
4. Equity in income of Word Corp.
5. Gain on sale of trading securities
6. Decrease in securities fair value adjustment
7. Increase in accounts receivable
8. Decrease in inventories
9. Decrease in accounts payable and accrued liabilities
10. Net cash provided by operating activities