Exercise 14-37 Operating Cash Flows During the year, Hepworth Company earned a net income of $61,725. Beginning and ending balances for the year for selected accounts are as follows:

There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows.
Required:
1. Prepare a schedule of operating cash flows using the indirect method.
2. Suppose that all the data are the same as Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was $20,475. What is the ending balance of accounts payable?
3. Conceptual Connection Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs $25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this year’s operating cash flows? If not, what would you suggest be done?

Account Beginning Ending Cash $108,000 $126,600 Accounts receivable 67,500 99,750 Inventory 36,000 52,500 Prepaid expenses 27,000 30,000 Accumulated depreciation 81,000 91,500 Accounts payable 45,000 55,125 Wages payable 27,000 15,000