The income statement and additional data of Barnaby Travel Products, Inc., follow:

Additional data:
a. Acquisition of plant assets was $156,000. Of this amount, $104,000 was paid in cash and $52,000 was financed by signing a note payable.

b. Proceeds from the sale of land totaled $39,000.

c. Proceeds from the issuance of common stock totaled $31,000.

d. Payment of a long-term note payable was $16,000.

e. Payment of dividends was $8,000.

f. From the balance sheets:

Requirements

1. Prepare Barnaby’s statement of cash flows for the year ended December 31, 2018, using the indirect method.

2. Evaluate the company’s cash flows for the year. In your evaluation, mention all three categories of cash flows and give the rationale for your evaluation.

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A1 Barnaby Travel Products, Inc. Income Statement Year Ended December 31, 2018 2 Revenues: 3 $ 236,000 8,500 Service revenue Dividend revenue 5 Expenses: Cost of goods sold Salary expense 8 $ 244,500 96,000 60,000 28,000 4,700 2,800 14,000 Depreciation expense Advertising expense 9. Interest expense 10 Income tax expense 11 205,500 $ 39,000 Net income 12 13 A1 December 31, 2017 2018 2 3 Current assets: Cash Accounts receivable Inventory Prepaid expenses $ 170,000 47,000 30,000 9,000 $ 33,200 63,000 72,000 8,800 8 9 Current liabilities: 10 11 Accounts payable $ 34,000 90,000 $ 19,000 35,000 Accrued liabilities 12