Question 4 [30 points]

Use the Southgate Inc. financial statements and supplementary information given below to prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method.

a. Purchased machinery for $49,000 cash. b. Sold the long-term investment on January 1, 2014 for $30,000. c. Sold machinery for $18,000 cash that had originally cost $48,000 and had $38,000 of accumulated depreciation. d. Issued $55,000 of bonds payable at face value. e. The short-term investment is a treasury bill that was purchased with maturity in 90 days. (select one) Statement of Cash Flows (select one) Cash flows from operating activities Adjust. to reconcile net income to cash provided by oper. act.: Southgate Inc. Comparative Balance Sheet Information December 31 Assets 2014 2013 Cash 260,300 175,000 Short-term investments 129,000 123,000 Accounts receivable 7.900 13,000 Merchandise inventory 22,300 69,000 Long term investment 0 47,000 241,000 240,000 Accumulated depreciation (136,000) (145,000) Total assets 524,500 522,000 Cash flows from investing activities Machinery Cash flows from financing activities Liabilities and Equity Accounts payable Dividends payable Bonds payable Share capital Retained earnings Total liabilities and equity. 76,500 16,000 55,000 314,000 63,000 524,500 53,000 28,000 0 314,000 127.000 522,000 Net increase (decrease) in cash Cash at beginning of year Cash at end of year, Sales Southgate Inc. Income Statement For Year Ended December 31, 2014 690,000 Cost Of Goods Sold 670,000 Depreciation expense, 29,000 Other expenses. 46,000 (745,000) Loss on sale of long-term investment (17,000) Gain on sale of machinery 8,000 Net loss 64.000