Prepare the statement of cash flow, Indirect Method

Explain step by step

Spartan Company reports $25,000 net income for the year ended December 31, 2016. Also:

1. Accounts Receivable increased by $7,500 during the year and Accounts Payable increased by $10,000 during the year. No other current assets or current liabilities were changed during 2016.

2. During 2016, Spartan reported $2,500 of Depreciation Expense.

3. During 2016, Spartan reported $2,000 gain on sale of equipment.

4. Given: Property, Plant & Equipment (PPE):

Beg. Balance $10,000 Ending Balance $7,000

Accumulated Depreciation(A.D.): Beg. Balance $ 3,000 Ending Balance $4,000

During the year, a piece of equipment was sold, which resulted in a Gain on Sale of Equipment of $2,000. A machine was acquired at a cost of $5,000 during the year.

5. Given: Common Stock:

Beg. Balance $160,000 Ending Balance $170,000

Long-term Debt: Beg. Balance $ 150,000 Ending Balance $130,000

Retained Earnings: Beg. Balance $ 60,000 Ending Balance $82,000

During the year, all declared dividends were paid.

6. Cash: Beg. Balance $5,500 Ending Balance $24,000