Presented below is the comparative balance sheet for Cousin Tommy's Toy Company as of December 31:

Additional information:
1. Operating expenses include depreciation expense of \(\$ 42,000\) and charges from prepaid expenses of \(\$ 4,220\).
2. Land was sold for cash at book value.
3. Cash dividends of \(\$ 32,000\) were paid.
4. Net income for 1996 was \(\$ 38,000\).
5. Equipment was purchased for \(\$ 95,000\) cash. In addition, equipment costing \(\$ 22,000\) with a book value of \(\$ 10,000\) was sold for \(\$ 8,100\) cash.
6. Bonds were converted at face value by issuing 50,000 shares of \(\$ 1\) par value common stock.
\section*{Instructions}
Prepare a statement of cash flows for the year ended December 31, 1996, using the indirect method.
Prepare a work sheet. (SO 6)

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COUSIN TOMMY'S TOY COMPANY Comparative Balance Sheet December 31 Assets 1996 1995 Cash $ 41,000 $ 45,000 Accounts receivable 47,500 52,000 Inventory 151,450 142,000 Prepaid expenses 16,780 21,000 Land 100,000 130,000 Equipment 228,000 155,000 Accumulated depreciation-equipment (45,000) (35,000) Building 200,000 200,000 Accumulated depreciation-building (60,000) (40,000) $679,730 $670,000 Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock, $1 par Retained earnings $ 43,730 $ 40,000 250,000 300,000 200,000 150,000 186,000 180,000 $679,730 $670,000