Stat Statement of Cash Flows

The following is Grafton Corporation's comparative balance sheets for $2014$ and $2013$ :

Cash

Accounts receivable

Inventories

Property, plant, and equipment

Accumulated depreciation

Investment in Elkins Corporation

Loan receivable

Total assets

Accounts payable

Income taxes payable

Dividends payable

Capital lease obligation

Capital stock, common, $$1$ par

Additional paid$-$in capital

Retained earnings

Total liabilities and

stockholders' equity

Additional information:

On December $31,2013,$ Grafton acquired $25$ percent of Elkins Corporation's common

stock for $$137,500.$ On that date, the carrying value of Elkins' net assets and liabilities

$($which approximated fair value$)$ was $$550,000.$ Elkins reported income of $$60,000$ for

the year ended December $31,2014.$ No dividend was paid on Elkins' common stock

during the year.

During $2014,$ Grafton loaned $$150,000$ to Beckley Company, an unrelated entity.

Beckley made the first semi$-$annual principal payment of $$15,000,$ plus interest at $10$

percent, on October $1,2014.$

On January $2,2014,$ Grafton sold equipment costing $$30,000,$ with a carrying value of

$$17,500,$ for $$20,000$ cash.

On January $2,2014,$ Grafton entered into a capital lease for an office building. The

present value of the annual rental payments is $$200,000,$ which equals the fair value of

the building. Grafton made the first lease payment of $$30,000$ when due on January $2,2015.$

$5.$ Grafton$$s net income for $2014$ was $$180,000.$

$6.$ Grafton declared and paid cash dividends for $2014$ and $2013$ as follows:

Required:

Declared Paid Amount

$2014$ Dec. $15,2014$ Feb. $28,2015$

$ $40,000$

$2013$ Dec. $15,2013$ Feb. $28,2014$

$ $45,000$

Prepare a statement of cash flows for Grafton Company for $2014$ using the indirect method. Include relevant supplemental schedules.