P23-2 (LO2,4) EXCEL GROUPWORK (SCF-Indirect Method) The comparative balance sheets for Hinckley Corporation show the following information. December 31 2017 2016 Cash Accounts receivable Inventory Available-for-sale debt investments Buildings Equipment Patents S 33,500 $13,000 10,000 9,000 12,250 12,000 29,750 20,000 6,250 45,000 5,000 $91,000 Allowance for doubtful accounts Accumulated depreciation-equipment Accumulated depreciation-building Accounts payable Dividends payable Notes payable, short-term (nontrade) Long-term notes payable Common stock Retained earnings s 3,000$4,500 4,500 6,000 3,000 4,000 25,000 33,000 6,000 91,000 31,000 43,000 20,750 $107,750 Additional data related to 2017 are as follows. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2.500. $10,000 of the long-term note payable was paid by issuing common stock. 1. 2. 3. Cash dividends paid were $5,000. 4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were $30,000 (net of $2,000 taxes). 5. Investments (available-for-sale) were sold at $1,700 above their cost. The company has made similar sales and investments in the past. 6. Cash was paid for the acquisition of equipment. 7. A long-term note for $16,000 was issued for the acquisition of equipment. 8. Interest of $2,000 and income taxes of $6,500 were paid in cash. Instructions Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country