Refer to all of the facts in Problem 12-9A.

Problem 12-9A.

The balance sheet of Poodle Company at the end of 2016 is presented here, along with certain other information for 2017:

..........................................................................December 31, 2016

Cash .................................................................................$ 155,000

Accounts receivable ................................................................140,000

Total current assets ............................................................$ 295,000

Land ...............................................................................$ 100,000

Plant and equipment ...............................................................700,000

Accumulated depreciation ......................................................(175,000)

Investments .........................................................................125,000

Total long-term assets .........................................................$ 750,000

Total assets ....................................................................$1,045,000

Current liabilities .................................................................$ 325,000

Bonds payable ....................................................................$ 100,000

Common stock ....................................................................$ 500,000

Retained earnings ..................................................................120,000

Total stockholders' equity ......................................................$ 620,000

Total liabilities and stockholders' equity ....................................$1,045,000

Other information is as follows:

a. Net income for 2017 was $50,000.

b. Included in operating expenses was $25,000 in depreciation.

c. Cash dividends of $40,000 were declared and paid.

d. An additional $50,000 of common stock was issued for cash.

e. Bonds payable of $100,000 were purchased for cash and retired at no gain or loss.

f. Cash purchases of plant and equipment during the year were $60,000.

g. An additional $200,000 of land was acquired in exchange for a long-term note payable.

h. During the year, sales exceeded cash collections on account by $15,000. All sales are on account.

i. The amount of current liabilities decreased by $20,000 during the year.

Required

1. Prepare a balance sheet at December 31, 2017.

2. Using the format in the chapter's appendix, prepare a statement of cash flows work sheet.

3. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section.

4. Provide a possible explanation as to why Poodle decided to purchase and retire bonds during

2017.