Problem 2:

Daugherty Companys most recent income statement and comparative balance sheets appear below:

Income Statement Comparative Balance Sheet

20X2 20X1

Net Sales.....400,000 Cash.....28,000 33,000

Cost of Goods Sold........235,000 Accounts receivable......8,500 9,400

Gross Profit.........165,000 Trading Securities.33,000 31,000

Operating Expense............142,500 Inventory43,200 44,000

Operating Income..........22,500 Long-term Investments20,000 15,000

Interest Expense....(3,000) PP&E...............127,000 105,000

Loss on Sale of PP&E...(1,500) Accumulated Dep- PP&E...(20,500) (22,000)

Unreal Gain on Trading Sec......2,000.............. (2,500) Total Assets239,200 215,400

Income Before Tax....20,000

Income Tax Expenses.....6,000 Accounts Payable.3,000 4,000

Net Income..14,000. Salaries Payable...2,100 900

Interest Payable.1,600 3,400

Notes Payable, short term.......5,000 2,000

Notes Payable long-term...22,000 27,000

Common stock.28,000 23,000

Additional Paid in Capital.....100,000 80,000

Retained earnings...77,500 75,100

Total Liab & Owners Equity...$239,200 $215,400

Additional Information:

During 20X2, the company sold PP&E with an original cost of $25,000 and $15,000 of accumulated depreciation. Dividends of $11,600 were declared and paid.

Requirements:

In good form (i.e proper heading, labels, etc.) prepare a statement of cash flows using the indirect method for Dougherty Company for the year ended December 31, 20X2. You can skip the necessary supplemental disclosure.