Presented below is the comparative balance sheet for Cortina Company at December 31:

Additional information:
1. Operating expenses include depreciation expense \(\$ 70,000\) and charges from prepaid expenses of \(\$ 4,400\).
2. Land was sold for cash at cost.
3. Cash dividends of \(\$ 74,290\) were paid.
4. Net income for 1996 was \(\$ 26,890\).
5. Equipment was purchased for \(\$ 65,000\) cash. In addition, equipment costing \(\$ 40,000\) with a book value of \(\$ 13,000\) was sold for \(\$ 14,000\) cash.
6. Bonds were converted at face value by issuing 30,000 shares of \(\$ 1\) par value common stock.
\section*{Instructions}
Prepare a statement of cash flows for 1996 using the indirect method.
Prepare a work sheet \((506\) )

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CORTINA COMPANY Comparative Balance Sheet December 31 1996 1995 Cash $ 40,000 $ 57,000 Accounts receivable 77,000 64,000 Inventory 132,000 140,000 Prepaid expenses 12,140 16,540 Land 125,000 150,000 Equipment 200,000 175,000 Accumulated depreciation-equipment (60,000) (42,000) Building Accumulated depreciation-building 250,000 250,000 (75,000) (50,000) $701,140 $760,540