Question 5

A comparative statement of financial position for Spencer Corporation follows:

SPENCER CORPORATION Statement of Financial Position
		December 31
Assets		2014			2013
Cash		$48,100			$21,460
Accounts receivable		64,380			43,660
Inventory		172,420			133,940
Investments in shares (fair value through OCI)		46,620			62,160
Land		48,100			76,220
Equipment		288,600			318,200
Accumulated depreciationequipment		(86,580	)		(63,640	)
Goodwill		91,760			128,020
Total		$673,400			$720,020
Liabilities and Shareholders Equity
Accounts payable		$8,880			$37,740
Dividends payable		11,100			23,680
Notes payable		236,800			321,900
Common shares		196,100			92,500
Retained earnings		213,120			210,160
Accumulated other comprehensive income		7,400			34,040
Total		$673,400			$720,020

Additional information:

1.		Net income for the fiscal year ending December 31, 2014, was $14,060.
2.		In March 2014, a plot of land was purchased for future construction of a plant site. In November 2014, a different plot of land with original cost of $63,640 was sold for proceeds of $70,300.
3.		In April 2014, notes payable amounting to $103,600 were retired through issuance of common shares. In December 2014, notes payable amounting to $18,500 were issued.
4.		Fair valueOCI investments were purchased in July 2014 for a cost of $11,100. By December 31, 2014, the fair value of Spencers portfolio of fair valueOCI investments decreased to $46,620. No fair valueOCI investments were sold in the year.
5.		On December 31, 2014, equipment with an original cost of $29,600 and accumulated depreciation to date of $8,880 was sold for proceeds of $15,540. No equipment was purchased in the year.
6.		Dividends on common shares of $23,680 and $11,100 were declared in December 2013 and December 2014, respectively. The 2013 dividend was paid in January 2014 and the 2014 dividend was paid in January 2015. Dividends paid are treated as financing activities.
7.		Goodwill impairment loss was recorded in the year to reflect a decrease in the recoverable amount of goodwill. No goodwill was purchased or sold in the year.

(a) Prepare a statement of cash flows using the indirect method for cash flows from operating activities.