Cloverdale Sales Corp. had the financial statements for the year ended December 31 shown
below.
CLOVERDALE SALES CORP.
Income Statement
For the Year Ended December 31, 2014
Net sales............................................................$267,000
Cost of goods sold..................................................120,000
Gross margin.........................................................147,000
Operating expenses
Selling expenses......................................................73,800
Administrative expenses.............................................43,500
Interest expense........................................................8,700
Total operating expenses..........................................126,000
Operating income....................................................21,000
Income taxes............................................................8,400
Net income..........................................................$ 12,600

Additional information:
a. The administrative expenses included:
Amortization expense on plant and equipment = $24,000
Writedown of goodwill = $4,500
b. Sold equipment for its net book value. The equipment cost $44,685 and had been amortized for $15,000.
c. Purchased additional equipment for $94,750.
d. Exchanged common shares for land valued at $90,000.
e. Declared and paid cash dividends on common shares, $5,100.
f. Repurchased common shares for $75,000.
g. Paid $23,700 (of which $8,700 was interest) on the loans.
Required
1. Prepare a cash flow statement for Cloverdale Sales Corp. for the year ended December 31, 2014, using the indirect method. Consider the investments in money market funds to be a cash equivalent.
2. Comment on the results indicated by the cash flow statement.

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CLOVERDALE SALES CORP Balance Sheet December 31, 2014 and 2013 2014 2013 Assets Cash Investments in Accounts receivable Merchandise invento Prepaid expenses Plant and equipment $6,000 1,500 12,700 45,900 3,600 285,600 (24,000) 90,000 18,000 $439,300 S 27,600 4,500 34,200 107,815 2,850 235,535 % money-market funds ry Less accumulated amortization (15,000) Land Goodwill 22,500 $420,000 Total assets Liabilities Accounts payable Salaries payable $21,300 $ 22,500 21,000 99,000 13,300 142,500 34,000 84,000 Loans payable Total liabilities Shareholders' equity Common shares 150,000 135,000 127500 277,500 $420,000 165,000 Retained earnings Total shareholders' equity 300,000 $439,300 Total liabilities and shareholders' equity