E$12-7$Preparing and Evaluating a Simple Statement of Cash Flows $($Indirect Method$)$

Suppose the income statement for Goggle Company reports $$95$ of net income, after deducting depreciation of $$35.$ The company bought equipment costing $$60$ and obtained a long$-$term bank loan for $$70.$ The company$$s comparative balance sheet, at December $31,$ is presented here.

Required:

$1.$ Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and$/$or financing activities.

$2.$ Prepare a statement of cash flows using the indirect method.

$3.$ In one sentence, explain why an increase in accounts receivable is subtracted.

$4.$ In one sentence, explain why a decrease in inventory is added.

$5.$ In one sentence, explain why an increase in salaries and wages payable is added.

$6.$ Are the cash flows typical of a start$-$up$,$ healthy, or troubled company? Explain.