Comparative balance sheet accounts of Secada Inc. are presented below.

Additional data (ignoring taxes):
1. Net income for the year was $42,500.
2. Cash dividends declared during the year were $21,125.
3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
4. Investments that cost $20,000 were sold during the year for $23,750.
5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200. Secada€™s 2008 income statement follows (ignoring taxes).

Instructions
Prepare a statement of cash flows using the indirectmethod.

Transcribed Image Text:

Secada Inc. Comparative Balance Sheet Accounts As of December 31, 2008 and 2007 December 31 Debit Accounts 2008 2007 45,000 67,500 30,000 22,250 30,000 67,500 7,500 $269,750 $33,750 60,000 24,000 38,500 18,750 56,250 7,500 $238,750 Cash Accounts Receivable Merchandise Inventory Investments (available-for-sale) Buildings Land Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation- Buildings Accounts Payable Accrued Payables Long-Term Note Payable Common Stock, no par Retained Earnings 2008 2007 $ 2,250 5,625 13,500 30,000 3,375 26,000 150,000 39,000 $269,750 $ 1,500 2,250 9,000 24,750 2,625 31,000 125,000 42,625 $238,750 Sales Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,625 depreciation and $5,400 $540,000 380,000 160,000 bad debts) Income from operations Other: Gain on sale of investments 120,450 39.550 $3,750 (800) Loss on sale of machinery 2,950 42,500 Net income