Financial statements for Peachfield Corporation as well as additional information relevant to cash flows during the period follow.

Additional information:
1. Office equipment was sold during the year for $75,000.
Cost............$ 80,000
Accumulated depreciation......(10,000)
Book value...........$ 70,000
Market value...........75,000
Gain..............$ 5,000
2. Depreciation expense for the year was $62,400 as follows:
Store equipment..........$24,000
Delivery equipment.............27,000
Office equipment...........11,400
................$62,400
3. No other equipment was sold during the year. The following purchases were made for cash.
Store equipment........$ 55,200
Delivery equipment.........78,000
Office equipment.........24,060
................$157,260
4. Declared and paid cash dividends of $20,000.
5. Issued 11,200 shares of $10 par common stock for $118,000.
6. Issued a note payable for $10,700.
7. Additional store equipment was acquired by issuing a long-term note payable for $20,000.

REQUIRED
1. Prepare a statement of cash flows explaining the change in cash and cash equivalents.
2. Reconcile cash and cash equivalents at the bottom of the statement of cashflows.

Transcribed Image Text:

Peachfield Corporation Income Statement For Year Ended December 31, 20-2 Net sales $985| 01 0 이 00 515 0 0 0 00 Cost of goods sold $470| 01 이 이 00 299 4 00 00 $1701 6| 01 이 00 Gross profit Operating expenses Operating income Other revenues and expenses: $5 0 0 0 00 Gain on sale of office equipment 2| 10 0 00 (4 3 6 00) Interest revenue 6 6 6 4 00 $177 2 6 4 00 Interest expense Income before taxes 601 5| 01 이 00 Income tax experse $116| 기 6| 4| 00 Net income Peachfield Corporation Statement of Retained Earnings For Year Ended December 31, 20-2 Retained earnings, January 1, 20-2 $141 9 73 00 $1 16| 7 6 4 00 201 01 0 이 00 Net income Less dividends 96 7 6 4 00 $238 7 3 7 00 Net ingease in retained earnings Retained earnings, December 31, 20-2