Q1.

The following data relates to Larson Co. for the year ending December 31, 2020 and the

preceding year ended December 31, 2019.

Year

Year

2020

2019

$

$

Cash

100,000

78,000

Accounts receivable (net)

78,000

85,000

Inventories

101,500

90,000

Equipment

410,000

370,000

Accumulated depreciation

(150,000)

(158,000)

539,500

465,000

Accounts payable (merchandise creditors)

58,500

55,000

Cash dividends payable

5,000

4,000

Common stock, $10 par

200,000

170,000

Paid-in capital in excess of par--

Common Stock

62,000

60,000

Retained earnings

214,000

176,000

539,500

465,000

Additional information:

1. Equipment costing $125,000 was purchased for cash.

2. Equipment costing $85,000 with accumulated depreciation of $65,000 was sold

for $15,000.

3. The stock was issued for cash.

4. The only entries in the retained earnings account were net income of $51,000 and

cash dividends declared of $13,000.

Prepare a statement of cash flows using the indirect method of reporting cash flows from

operating activities.