Problem 14 The operations of The McKenzie, a small lodging operation, are becoming more complex. Ms. Jo McKenzie, the owner, has asked for your help in preparing her statement of cash flows. She is able to present you with condensed balance sheets and some additional information. The McKenzie Condensed Balance Sheets December 31, 20X3 and 20X4 Cash Accounts Receivable Investments Equipment Accumulated Depreciation Total Assets Current Liabilities: Accounts Payable Mortgage Payable (Current) Dividends Payable Noncurrent Liabilities: Mortgage Payable Notes Payable 20X3 $ 10,000 26,500 10,000 200,000 (20,000) $226,500 $ 18,000 5,000 5,000 75,000 -0- 20X4 $ 6,000 25,500 5,000 325,000 (40,000) $321,500 $ 21,000 5,000 5,000 70,000 40,000 Common Stock Retained Earnings Total Liabilities and Owners' Equity Statement of Cash Flows 491 50,000 100,000 73,500 80,500 $226,500 $321,500 Additional information for 20X4: 1. Equipment that cost $20,000 depreciated to its salvage value of $2,000 and was sold for $8,000. 2. Common stock, purchased as a long-term investment for $5,000, was sold for $15,000. 3. Dividends declared totaled $15,000. 4. Equipment was purchased for $145,000. 5. Depreciation expense totaled $38,000. 6. Long-term debt of $5,000 was reclassified as current and $5,000 of long-term debt was paid. 7. Common stock of $50,000 was sold and long-term debt of $40,000 (note payable) was borrowed. 8. The McKenzie generated net income of $22,000. Required: Prepare the SCF as requested by Ms. McKenzie using the indirect method. Jonge Problems