The net changes in the balance sheet accounts of ISTP, Inc. for the year 2010 are shown below:

Account Debit Credit

Cash $ 125,600

Accounts receivable $ 64,000

Allowance for doubtful accounts 14,000

Inventory 217,200

Prepaid expenses 20,000

Long-term investments 144,000

Land 300,000

Buildings 600,000

Machinery 100,000

Office equipment 28,000

Accumulated depreciation:

Buildings 24,000

Machinery 20,000

Office equipment 12,000

Accounts payable 183,200

Accrued liabilities 72,000

Dividends payable 128,000

Premium on bonds 32,000

Bonds payable 800,000

Preferred stock ($50 par) 60,000

Common stock ($10 par) 156,000

Additional paid-in capitalcommon 223,200

Retained earnings 87,200

$1,705,200 $1,705,200

Additional information:

1. Net income for the year was $140,000.

2. Cash dividends of $128,000 were declared December 15, 2010, payable January 15, 2011. A 5% stock dividend was issued March 31, 2010, when the market value was $22 per share.

3. The long-term investments were sold for $140,000.

4. A building and land which cost $480,000 and had a book value of $300,000 were sold for $400,000. The cost of the land, included in the cost and book value above, was $20,000.

5. The following entry was made to record an exchange of an old machine for a new one:

Machinery ................................................................... 160,000

Accumulated DepreciationMachinery...................... 40,000

.................................................................... Machinery 60,000

.............................................................................. Cash 140,000

6. A fully depreciated copier machine which cost $28,000 was written off.

7. Preferred stock of $60,000 par value was redeemed for $80,000.

8. The company sold 12,000 shares of its common stock ($10 par) on June 15, 2010 for $25 a share. There were 87,600 shares outstanding on December 31, 2010.

9. Bonds were sold at 104 on December 31, 2010.

Instructions

Prepare a statement of cash flows (indirect). Ignore tax effects.

Each section of the cash flow has 20 points.