ESSAY. Write your answer in the space provided or on a separate sheet of paper.

12) Nashville Records Company uses the indirect method to prepare its statement of cash flows. Refer to the following sections of the comparative balance sheet:

Nashville Records Company

Comparative Balance Sheet

December 31, 2018 and 2017

2018 2017 Increase (Decrease)

Accounts Payable $ 6,000 $ 9,000 $(3,000)

Accrued Liabilities 3,000 1,500 1,500

Long-term Notes Payable 126,000 135,000 (9,000)

Total Liabilities $135,000 $145,500 $(10,500)

Common Stock 45,000 3,000 42,000

Retained Earnings 169,500 111,000 58,500

Treasury Stock (12,000) (7,500) (4,500)

Total Equity 202,500 106,500 96,000

Total Liabilities and Stockholders' Equity $337,500 $252,000 $85,500

Additional information for 2018:

No stock was retired.

No treasury stock was sold.

The company repaid $60,000 of long-term notes payable.

The company borrowed $51,000 on a new long-term note payable.

Net income for the year was $68,000.