The balance sheet of Terrier Company at the end of 2016 is presented here, along with certain other information for 2017:

..............................................................December 31, 2016

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

Accounts receivable ....................................................155,000

Total current assets .................................................$ 295,000

Land ...................................................................$ 300,000

Plant and equipment ...................................................500,000

Accumulated depreciation ...........................................(150,000)

Investments .............................................................100,000

Total long-term assets .............................................$ 750,000

Total assets .......................................................$1,045,000

Current liabilities ....................................................$ 205,000

Bonds payable .......................................................$ 300,000

Common stock .......................................................$ 400,000

Retained earnings ......................................................140,000

Total stockholders' equity .......................................$ 540,000

Total liabilities and stockholders' equity ...................$1,045,000

Other information is as follows:

a. Net income for 2017 was $70,000.

b. Included in operating expenses was $20,000 in depreciation.

c. Cash dividends of $25,000 were declared and paid.

d. An additional $150,000 of bonds was issued for cash.

e. Common stock of $50,000 was purchased for cash and retired.

f. Cash purchases of plant and equipment during the year were $200,000.

g. An additional $100,000 of bonds was issued in exchange for land.

h. During the year, sales exceeded cash collections on account by $10,000. All sales are on account.

i. The amount of current liabilities remained unchanged during the year.

Required

1. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Include a supplemental schedule for noncash activities.

2. Prepare a balance sheet at December 31, 2017.

3. Provide a possible explanation as to why Terrier decided to issue additional bonds for cash during 2017.