Based on the following information, prepare a statement of cash flows for Year 2. Use the indirect method (label all the line items in the cash flow statement).

The MBA Corporation
Comparative Balance Sheet
	As of December 31,
	Year 1	Year 2
Assets
Current assets
Cash	$20,000	$40,000
Accounts receivable	40,000	30,000
Inventories	30,000	40,000
Total current assets	90,000	110,000
Property, plant, and equipment
Land	20,000	20,000
Building and equipment	200,000	280,000
Accumulated depreciation	-20,000	-60,000
Total property, plant, and equipment	200,000	240,000
Total Assets	$290,000	$350,000
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	40,000	60,000
Total current liabilities	40,000	60,000
Noncurrent liabilities
Bonds payable	100,000	80,000
Notes payable	40,000	60,000
Total noncurrent liabilities	140,000	140,000
Shareholders' equity
Common stock	40,000	60,000
Retained earnings	70,000	90,000
Total shareholders' equity	110,000	150,000
Total Liabilities and Shareholders' Equity	$290,000	$350,000

Dividends declared and paid during Year 2 are $10,000. MBA Corporation sold one building for $100,000. The historical cost of the building was $160,000 and the accumulated depreciation was $80,000. MBA Corporation also purchased new equipment during the year for $240,000. Depreciation expense for the year for building and equipment was $120,000.

Answer rating: 100% (QA)

The MBA Corporation Statement of Cash Flows For the Year Ended December 31 Year 2 Cas... View the full answer