Problem 14-21A (Algo) Using financial statements to prepare a statement of cash flows-direct method LO 14-2, 14-3, 14-4

The following financial statements were drawn from the records of Gibson Shoes:

Balance Sheets As of December 31
	Year 2				Year 1
Assets
Cash	$	120,014			$	26,500
Accounts receivable		59,530				68,930
Merchandise inventory		127,381				115,250
Notes receivable		0				28,700
Equipment		143,200				252,600
Accumulated depreciationequipment		(76,535	)			(142,280	)
Land		84,500				52,500
Total assets	$	458,090			$	402,200
Liabilities
Accounts payable	$	41,533			$	48,060
Salaries payable		25,875				20,700
Utilities payable		502				1,003
Interest payable		0				1,810
Notes payable (long-term)		0				64,500
Common stock		307,300				242,400
Retained earnings		82,880				23,727
Total liabilities and equity	$	458,090			$	402,200

Income Statement For the Year Ended December 31, Year 2
Sales revenue	$	583,080
Cost of goods sold		(289,528	)
Gross margin		293,552
Operating expenses
Salaries expense		(186,390	)
Depreciation expense		(16,675	)
Utilities expense		(12,130	)
Operating income		78,357
Nonoperating items
Interest expense		(3,229	)
Loss on the sale of equipment		(2,490	)
Net income	$	72,638

Additional Information

Sold equipment costing $109,400 with accumulated depreciation of $82,420 for $24,490 cash.

Paid a $13,485 cash dividend to owners.

Required:

Analyze the data and prepare a statement of cash flows using the direct method. (Amounts to be deducted and cash outflows should be indicated by a minus sign.)

GIBSON SHOES
Statement of Cash Flows
For the Year Ended December 31, Year 2
Cash Flows From Operating Activities:
Cash receipts from customers
Cash Payments for:
Total cash outflows
Cash Flows from Investing Activities:
Cash Flows from Financing Activities:
Ending cash balance