Refer to the following financial statements for Crosby Corporation: CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 Sales $4,110,000 Cost of goods sold 2,680,000 Gross profit $1,430,000 Selling and administrative expense 729,000 Depreciation expense 298,000 Operating income $ 403,000 Interest expense 80, 700 Earnings before taxes $ 322,300 Taxes 210,000 Earnings after taxes $ 112,300 Preferred stock dividends 10,000 Earnings available to common stockholders 102,300 Shares outstanding 150,000 Earnings per share $ 0.68 Statement of Retained Earnings For the Year Ended December 31, 20x2 Retained earnings, balance, January 1, 20X2 $554,000 Add: Earnings available to common stockholders, 20x2 102,300 Deduct: Cash dividends declared and paid in 20x2 169,000 Retained earnings, balance, December 31, 20X2 $487,300 Year-End 20x2 $ 94,300 552,000 668,000 38,000 $1,352,300 82,400 2,620,000 1,598,000 1,022,000 $2,456,700 Comparative Balance Sheets For 20x1 and 20x2 Year-End 20x1 Assets Current assets: Cash $ 123,000 Accounts receivable (net) 524,000 Inventory 661,000 Prepaid expenses 63,500 Total current assets $1,371,500 Investments (long-term securities) 94,900 Gross plant and equipment 2,120,000 Less: Accumulated depreciation 1,300,000 Net plant and equipment 820,000 Total assets $2,286,400 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 389,000 Notes payable 509,000 Accrued expenses 72,400 Total current liabilities $ 970,400 Long-term liabilities: Bonds payable, 20x2 172,000 Total liabilities $1, 142,400 Stockholders' equity: Preferred stock, $100 par value $ 90,000 Common stock, $1 par value 150,000 Capital paid in excess of par 350,000 Retained earnings 554,000 Total stockholders' equity $1,144,000 Total liabilities and $2,286, 400 stockholders' equity $ 589,000 509,000 51,400 $1,149,400 230,000 $1,379,400 $ 90,000 150,000 350,000 487,300 $1,077, 300 $2,456,700 a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with parentheses or a minus sign.) Answer is complete but not entirely correct. CROSBY CORPORATION Statement of Cash Flows For the Year Ended December 31, 20X2 Cash flows from operating activities: Net income 112,300 Adjustments to determine cashflow from operating activities: Add back depreciation $ 298,000 Increase in accounts receivable 32,000 X Increase in inventory 7,000 Decrease in prepaid expenses 25,500 Increase in accounts payable 200,000 Decrease in accrued expenses 21,000 Total adjustments $ 583,500 Net cash flows from operating activities $ 695,800 Cash flows from investing activities: Decrease in investments 12,500 Increase in plant and equipment 500,000 Net cash flows from investing activities $ 512,500 Cash flows from financing activities: Increase in bonds payable 58,000 Preferred stock dividends paid 10,000 X Common stock dividends paid 169,000 Net cash flows from financing activities $ 237,000 Net increase in cash flows $ 28,700