Sharon Feldman, president of Allied Products, considers $20,000

Sharon Feldman, president of Allied Products, considers $20,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $15,000 in cash was available at the end of 2008. Since the company reported a large net income for the year, and also issued bonds and sold some long-term investments, the sharp decline in cash is puzzling to Ms. Feldman.

Sharon Feldman, president of Allied Products, considers $20,000

The following additional information is available for the year 2008:
a. The company sold long-term investments with an original cost of $30,000 for $50,000 during the year.
b. Equipment that had cost $90,000 and on which there was $40,000 in accumulated depreciation was sold during the year for $44,000.
c. Cash dividends totaling $28,000 were declared and paid during the year.
d. The stock of a dissident stockholder was repurchased for cash and retired during the year. No issues of stock were made.
1. Using the indirect method, compute the net cash provided by operating activities for 2008.
2. Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for 2008.
3. Explain the major reasons for the decline in the company€™s cashbalance.


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