The following data show the account balances of Good Time, Inc., at the beginning and end of the company's fiscal year.

a. The following information concerning this year was also available: All purchases and sales were on account.

b. Equipment with an original cost of $5,000 was sold for $1,500; a lost of $500 was recognized on the sale.

c. Among other items, the operating expenses included Depreciation Expense of $3,500; Interest Expense of $1,400; and Insurance Expense of $1,200.

d. Equipment was purchased by issuing common stock and paying the balance ($6,000) in cash.

e. Treasury stock was sold for $2,000 less than it cost; the decrease in stockholders' equity was recorded by reducing Retained Earnings.

f. No dividends were paid this year. You are to examine Good Time's cash position by: 1. Preparing schedules showing the amount of cash collected from accounts re- ceivable, cash paid for accounts payable, cash paid for interest, and cash paid for insurance. 2. Preparing a statement of cash flows for Good Time for the fiscal year 2000 using the direct method. 3. Identifying the major reasons why Good Time's cash and cash equivalents in- creased so dramatically during the year. 4. Commenting on whether the dividend policy seems appropriate under the current circumstances.

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Debits Aug. 31, 2000 Sept. 1, 1999 Cash and cash equivalents.. $ 88,200 $ 29,000 Accounts receivable (net) 15,000 13,300 Inventory 10,500 12,700 Prepaid insurance. 2,800 2,000 Long-term investments (cost equals market). 3,000 8,400 Equipment.... 40,000 33,000 Treasury stock (at cost) 5,000 10,000 Cost of goods sold.. 184,000 Operating expenses. Income taxes. Loss on sale of equipment Total debits.. 93,500 18,800 500 $461,300 $108,400 Credits Accumulated depreciation-equipment... $ 9,500 $ 9,000 Accounts payable....... 3,500 5,600 Interest payable. 500 1,000 Income taxes payable. 6,000 4,000 Notes payable-long-term 8,000 12,000 Common stock..... 55,000 50,000 Paid in capital in excess of par. 16,000 15,000 Retained earnings 9,800* 11,800 Sales 352,000 Gain on sale of long-term investments. 1,000 Total credits $461,300 $108,400 "Preclosing balance