Statement of Cash Flows -- Troubleshooting Homework Why doesn't this balance? Please fix it. (There could be up to 5 mistakes.) Current year Balance sheet Income statement Cash Accounts receivable Inventory Total current assets Equipment, at cost Less: Accum. depreciation Net book value of equipment Total assets End of Beginning year of year 76,000 42,000 116,000 107,000 88,000 94,000 280,000 243,000 280,000 210,000 (80,000) (67,000) 200,000 143,000 480,000 386,000 Change 34,000 9,000 (6,000) 37,000 70,000 (13,000) 57,000 94,000 900,000 700,000 200,000 135,000 65,000 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other income & (expense): Interest expense Interest income Loss on sale of equipment Total other income (expense) Income before taxes Income tax expense Net income (12,500) 1,500 (4,000) (15,000) 50,000 20,000 30,000 Accounts payable Interest payable Total current liabilities Notes payable Total liabilities Common stock Additional paid-in capital Retained earnings Total S.H. equity Total liabilities & equity 70,000 7,000 77,000 235,000 312,000 40,000 25,000 103,000 168,000 480,000 81,000 4,000 85,000 176,000 261,000 30,000 20,000 75,000 125,000 386,000 (11,000) 3,000 (8,000) 59,000 51,000 10,000 5,000 28,000 43,000 94,000 Additional information: Equipment that originally cost 15,000 with accumulated depreciation of 8,000 was sold during the year for cash. The company also had 75,000 of new borrowing during the year. Depreciation expense is included as part of the amount for operating expenses in the income statement. Statement of Cash Flows - Indirect Method Cash Flow from Operating Activities: Net income Depreciation expense Loss on sale of equipment Change in accounts receivable Change in inventory Change in accounts payable Change in interest payable Net cash flow from operating activies Incorrect version Correct amounts 30,000 13,000 4,000 (9,000) 6,000 11,000 3,000 58,000 Cash Flow from Investing Activities: Proceeds from the sale of equipment Purchases of equipment Net cash flow from investing activities 3,000 (70,000) (67,000)| Cash Flow from Financing Activities: Proceeds from issuance of long-term debt Principal payments on long-term debt Proceeds from issuance of common stock Dividends paid Net cash flow from financing activities 75,000 (59,000) 15,000 (2,000) 29,000 Cash Flow from Financing Activities: Proceeds from issuance of long-term debt Principal payments on long-term debt Proceeds from issuance of common stock Dividends paid Net cash flow from financing activities 75,000 (59,000) 15,000 (2,000) 29,000 Net increasel(decrease) in cash Cash at beginning of year Cash at end of year 20,000 42,000 62,000