Refer to the information provided in Brief Exercises 14-19, 14-20, and 14-21.

Swasey Company

Comparative Balance Sheets

At December 31, 20X1 and 20X2

20X1 20X2

Current assets:

Accounts receivable.........$1,500,000............$1,165,000

Inventories........................600,000...............640,000

Current liabilities:

Wages payable..................1,400,000.............1,030,000

Swasey Company

Income Statement

For the Year Ended December 31, 20X2

Revenues............................................................$ 6,000,000

Gain on sale of equipment.............................................200,000

Cost of goods sold.................................................(3,840,000)

Depreciation expense.................................................(540,000)

Interest expense.........................................................(20,000)

Net income..........................................................$ 1,800,000

Required:

1. Prepare a statement of cash flows for Swasey for 20X2.

2. What is the relationship between the statement of cash flows and the change in cash calculated in Brief Exercise 14-18?