Statement of Cash Flows (Indirect Method) Dair Company's income statement and comparative balance sheets follow. DAIR COMPANY Income Statement For Year Ended December 31, 2019 Sales $ 700,000 Cost of goods sold $ 440,000 Wages and other operating expenses 95,000 Depreciation expense 22,000 Amortization expense 7,000 Interest expense 10,000 Income tax expense 36,000 Loss on bond retirement 5,000 615,000 Net income 85,000 DAIR COMPANY Balance Sheets Dec. 31, 2019 Dec. 31, 2018 Assets Cash $ 27,000 53,000 103,000 12,000 $ 18,000 48,000 109,000 10,000 336,000 (84,000) 50,000 $ 487,000 360,000 (87,000) 43,000 $ 511,000 Accounts receivable Inventory Prepaid expenses Plant assets Accumulated depreciation Intangible assets Total assets Liabilities and Stockholders' Equity Accounts payable Interest payable Income tax payable Bonds payable Common stock Retained earnings Total liabilities and equity $ 26,000 7,000 $ 32,000 4,000 6,000 60,000 252,000 157,000 $ 511,000 8,000 120,000 228,000 98,000 $ 487,000 During 2019, the company sold for $17,000 cash old equipment that had cost $36,000 and had $19,000 accumulated depreciation. Also in 2019, new equipment worth $60,000 was acquired in exchange for $60,000 of bonds payable, and bonds payable of $120,000 were retired for cash at a loss. A $26,000 cash dividend was declared and paid in 2019. Any stock issuances were for cash. (a) Compute the change in cash that occurred in 2019. Cash, December 31, 2019 $ Cash, December 31, 2018 Cash increase during 2019 $ (b) Prepare a 2019 statement of cash flows using the indirect method. Use negative signs with answers to show a decrease in cash. DAIR COMPANY STATEMENT OF CASH FLOWS FOR YEAR ENDED DECEMBER 31, 2019 Net Cash Flow from Operating Activities Net Income Add(Deduct) Items to Convert Net Income to Cash Basis Depreciation Amortization expense Loss on Bond Retirement Accounts Receivable Inventory Prepaid Expenses Accounts Payable Interest Payable Income Tax Payable Net Cash Provided by Operating Activities Cash Flows from Investing Activities Sale of Equipment Cash Flows from Financing Activities Retirement of Bonds Payable Issuance of Common Stock Payment of Dividends Net Cash Used by Financing Activities Net Increase in Cash Cash at Beginning of Year Cash at End of Year $ (c) Prepare separate schedules showing (1) cash paid for interest and for income taxes and (2) noncash investing and financing transactions. (1) Supplemental Cash Flow Disclosures Cash Paid for Interest Cash Paid for Income Taxes $ $ (2) Schedule of Noncash Investing and Financing Activities Issuance of Bonds Payable to Acquire Equipment Check