Sophos, Inc. prepared a B/S at Dec. 31, 2004.

Cash$ 50,000

A/R27,000

Inv80,000

LT investments10,000

Land32,000

Plant and equipment (net)91,000

Total assets$290,000

A/P$ 17,000

Taxes payable3,000

Bonds Payable100,000

C/S75,000

R/E95,000

Total liabilities and SE$290,000

The following occurred during 2005.

1. $25,000 in cash and a $35,000 note payable were exchanged for land valued at $60,000.
2. Bonds payable (maturing 2009) in the amount of $20,000 were retired by paying $18,000 cash.
3. Common shares in the amount of $50,000 were issued.
4. The company sold surplus equipment, with a book-value of $14,000 for $18,000.
5. Net income was $31,000
6. Cash dividends of $2,500 were paid.
7. 100 C/S (considered short-term investments) were purchased for $8,300. (Hint: treat it as CFI)
8. A new building was acquired through the issuance of $50,000 in bonds.
9. $8,000 of depreciation was recorded on the plant and equipment.
10. At Dec. 31, 2005, Cash was $87,200. A/R had a balance of $30,000, Inv had increased to $82,000 and A/P had fallen to $12,000. LT investments and Taxes payable were unchanged from 2004.

Required:

(a). statement of cash flows for 2005 using the indirect method. (10 marks)

(b). B/S for Sophos, Inc at Dec. 31, 2005.(10 marks)