The following information, in T-account format, is provided for the M \& M Company for the year 2000 .

Cash Account

\begin{tabular}{lr|lr}

\hline Beg. Bal. & 15,400 &

(b) & 56,500 \\

(a) & 147,000 &

(c) & 23,000 \\

(d) & 3,500 &

(f) & 59,700 \\

(e) & 15,000 & (g) & 1,600 \\

& & (h) & 2,400 \\

\hline

\end{tabular}

End. Bal. $\quad 37,700$

Additional information:

a. Sales revenue for the period was $\$ 145,000$. Accounts receivable (net) decreased $\$ 2,000$ during the period.

b. Net purchases of $\$ 58,000$ were made during 2000 , all on account. Accounts payable increased $\$ 1,500$ during the period.

c. The equipment account increased by $\$ 18,000$ during the year.

d. One piece of equipment that cost $\$ 5,000$, with a net book value of $\$ 3,000$, was sold for a $\$ 500$ gain.

e. The company borrowed $\$ 15,000$ from its bank during the year.

f. Various operating expenses were all paid in cash, except for depreciation of $\$ 1,800$. Total operating expenses were $\$ 61,500$.

g. Interest expense for the year was $\$ 1,200$. The interest payable account decreased by $\$ 400$ during the year.

h. Income tax expense for the year was $\$ 3,600$. The income taxes payable account increased by $\$ 1,200$ during the year.

Required:

1. From the information given, reconstruct the journal entries that must have been made during the year (omit explanations).

2. Prepare a statement of cash flows for $\mathbf{M}$ \& $\mathrm{M}$ Company for the year ended December 31, 2000 .