The CEO of Z-Corp is puzzled as to why the company has run into bank overdraft when it has been profitable in the past year. The financial statements appear below:-

Comparative Balance Sheets as at December 31

Assets 2019 2020

Bank $ 28,600 $ - Accounts receivable 21,850 38,000 Merchandise inventory 30,700 45,400 Prepaid expenses 5,520 4,900 Property, plant, and equipment 118,000 155,000 Accumulated depreciation (54,500) (65,400) Total 150,170 177,900

Liabilities and Stockholders Equity 2019 2020

Bank overdraft $ - $ 39,200 Accounts payable 35,170 27,100 Income taxes payable 10,300 8,200 Bonds payable 30,000 10,000 Common stock 45,000 55,000 Retained earnings 29,700 38,400 Total 150,170 177,900

Income Statement for the year ended December 31, 2019

Sales 250,000 Cost of goods sold 130,000 Gross profit 120,000 Selling expenses 45,000 Administrative expenses 19,000 64,000 Income from operations 56,000 Interest expense 1,500 Income before income taxes 54,500 Income tax expense 15,800 Net income after tax 38,700

Additional information regarding the year ended December 31, 2019

1) Dividends declared and paid were $30,000. 2) During the year an old equipment costing $15,000 was sold for $2,800 at a loss of $1,000. New equipment costing $22,000 was purchased to replace the old equipment. 3) Total depreciation expenses of $22,100 and the loss on sale of equipment are included in selling expenses. 4) Purchased property costing $30,000, full cash payment was made. 5) Bonds were redeemed at face value. 6) Additional shares of stock were issued for cash at par. Required: Prepare a cash flow statement for the year ended December 31, 2019 using the indirect method. (Show all relevant workings)