Exercise 13.2

Use the following data to prepare a Statement of Cash Flows

Income Statement

For the Year ended December 31, 2008

Sales	$590,000
Cost of Goods Sold	300,000
Gross Profit	290,000
Operating Expenses
Depreciation Expense	24,000
Other Expenses	216,000
Interest Expense	7,000
Income from Operations	43,000
Other Gains (losses)
Gain on retirement of bonds	16,000
Loss on sale of equipment	(6,000)
Income before Taxes	53,000
Income Taxes	15,000
Net Income	$38,000

Comparative Balance Sheet

For the Year ended December 31, 2008

Assets	2008	2007
Current Assets
Cash	17,000	12,000
Accounts Receivable	60,000	40,000
Merchandise Inventory	84,000	70,000
Prepaid Expenses	6,000	4,000
Total Current Assets	167,000	126,000
Property, plant, and equipment
Equipment	250,000	210,000
Acc. Depreciation	(60,000)	(48,000)
Total PP&E	$190,000	$162,000
Total Assets	$357,000	$288,000
Liabilities & Equity
Current Liabilities
Accounts Payable	35,000	40,000
Interest Payable	3,000	4,000
Income Taxes Payable	22,000	12,000
Total Current Liabilities	60,000	56,000
Long-term liabilities Long-term bonds payable	90,000	64,000
Total Liabilities	150,000	120,000
Equity
Common Stock, $5 par	95,000	80,000
Retained Earnings	112,000	88,000
Total Equity	207,000	168,000
Total Liabilities & Equity	$357,000	$288,000

Additional Information:

1. Purchased equipment costing $70,000 by paying $10,000 cash and issuing $60,000 of bonds payable
2. Sold equipment with an original cost of $30,000 and accumulated depreciation of $12,000 for $12,000 cash, yielding a $6,000 loss
3. Received cash of $15,000 from issuing 3,000 shares of common stock
4. Paid $18,000 cash to retire bonds with a $34,000 carrying value, yielding a $16,000 gain
5. Declared and paid cash dividends of $14,000