Seaforce Manufacturing Inc. Income Statement Year Ended December 31, 20X5

Sale		$ 340,000
Cost of goods sold		$ 250,100
Gross Profit		$ 89,900
Operating Expenses		$ 55,000
Loss on Sale of equipment	$ 2,500	$ 57,500
Profit from Operations		$ 32,400
Other expenses
Interest Expense		$ 3,500
Profit before Income Tax		$ 28,900
Income Tax Expense		$ 12,000
Profit		$ 16,900

Additional Information: 1. Operating expenses include depreciation expense of $10,000 2. Accounts Payable related to the purchase of inventory 3. Equipment that cost $12,500 was sold at a loss of $2,500 4. New equipment was purchased during the year for $8,500 5. Dividends declared and paid in 20X5 totaled $3,000 6. Common shares were sold for $12,000 cash 7. Interest payable in 20X5 was $800 greater than interest payable in 20X4 Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5

	20X5	20X4
Cash	$ 6,450	$ 4,100
Accounts Receivable	$ 72,000	$ 6,500
Inventory	$110,250	$140,000
Prepaid Expenses	$ 1,750	$ 1,020
Equipment	$ 96,000	$100,000
Accumulated Depreciation - equipment	($50,000)	($42,000)
Total Assets	$236,450	$209,620
Account Payable	$ 16,230	$ 9,900
Interest Payable	$ 810	$ 10
Income taxes payable	$ 10,800	$ 9,500
Dividends Payable	$ 1,800	$ 2,800
Long-term Notes Payable	$ 55,000	$ 62,000
Common shares	$135,000	$123,000
Retained Earnings	$ 16,310	$ 2,410
Total Liabilities & Shareholders' Equity	$236,450	$209,620

What where the proceeds of the sale of the machinery when the indirect method is used to prepare the cash flow statement?

1. ($500)

2. None of the other alternatives are correct

3. $12,000

4. $8,000

5. $2,000