Problem 1 (25 points). The net changes in the balance sheet accounts of Pauling, Inc. for the year 20X3 are shown on the attached page. The following additional information is available. (a) Income statement data for the year ending December 31, 20X3 include the following: Income before extraordinary item, $136,000; Extraordinary loss due to condemnation of land, $66,000; and net income, $70,000. (b) Cash dividends of $64,000 were declared December 15, 20X3, payable January 15, 20X4. A 5% stock dividend was issued March 31, 20X3, when the market value was $22.00 per share. All changes to the long term investments account were due to sales of investments for $70,000. A building and land which cost $240,000 and had a book value of $150,000 were sold for $200,000. The cost of the land, included in the cost and book value above, was $10,000. (e) The following entry was made to record an exchange of an old machine for a new one. Machinery 80,000 20,000 Accumulated Depreciation, Machinery Machinery Cash 30,000 70,000 (f) A fully depreciated copier machine which cost $14,000 was written off. All other changes to the accumulated depreciation accounts were due to depreciation expense. (g) Preferred stock with a par value of $30,000 was redeemed for $40,000. (h) The company sold 6,000 shares of its common stock on June 15, 20X3, for $25 a share. There were 43,800 shares outstanding on December 31, 20X3. (i) Bonds payable were sold at 104 on December 31, 20X3. (1) Land that was condemned had a book value of $120,000. Credit 32,000 7,000 72,000 PAULING, INC. NET CHANGES IN BALANCE SHEET ACCOUNTS FOR YEAR ENDING DECEMBER 31, 20X3 Debit Cash 62,800 Accounts Receivable Allowance For Doubtful Accounts Inventory 108,600 Prepaid Expenses 10,000 Long Term Investments Land 150,000 Buildings 300,000 Machinery 50,000 Office Equipment Accumulated Depreciation, Buildings Accumulated Depreciation, Machinery Accumulated Depreciation, Office Equipment 6,000 Accounts Payable 91,600 Accrued Liabilities Dividends Payable Premium on Bonds Payable Bonds Payable Preferred Stock, $50 par value 30,000 Common Stock, $10 par value Additional Paid In Capital Retained Earnings 43,600 Totals 852,600 $ 14,000 12,000 10,000 36,000 64,000 16,000 400,000 78,000 111,600 852,600 REQUIRED: Prepare a statement of cash flows, in proper form using the indirect method, for the year ending December 31, 20X3. Ignore income tax effects. Exclude the reconciliation of cash balance but include a schedule of noncash investing and financing activities