Problem 20-7 Preparing cash flow statementIndirect method (LO 20-1, LO 20-2, LO 20-4)

Presented next are the balance sheet accounts of Bergen Corporation as of December 31, 20X1 and 20X0.

	20X1				20X0				Increase (Decrease)
Assets
Current assets:
Cash	$	541,000			$	308,000			$	233,000
Accounts receivable, net		585,000				495,000				90,000
Inventories		895,000				780,000				115,000
Total current assets		2,021,000				1,583,000				438,000
Land		350,000				250,000				100,000
Plant and equipment		1,060,000				720,000				340,000
Accumulated depreciation		(295,000	)			(170,000	)			(125,000	)
Leased equipment under capital lease		158,000				-0-				158,000
Marketable investment securities, at cost		-0-				75,000				(75,000	)
Investment in Mason, Inc., at cost		180,000				180,000				-0-
Total assets	$	3,474,000			$	2,638,000			$	836,000
Liabilities and Stockholders Equity
Current liabilities:
Current portion of long-term debt	$	159,000			$	-0-			$	159,000
Accounts payable and accrued expenses		760,000				823,000				(63000	)
Total current liabilities		919,000				823,000				96,000
Note payable, long-term		300,000				-0-				300,000
Liability under capital lease		124,000				-0-				124,000
Bonds payable		500,000				500,000				-0-
Unamortized bond premium		16,000				18,000				(2,000	)
Deferred income taxes		60,000				45,000				15,000
Common stock, par-value $20		640,000				600,000				40,000
Additional paid-in capital		304,000				244,000				60,000
Retained earnings		611,000				408,000				203,000
Total liabilities and stockholders equity	$	3,474,000			$	2,638,000			$	836,000

Additional Information:

• On January 2, 20X1, Bergen sold all of its marketable investment securities for $95,000 cash.
• On March 10, 20X1, Bergen paid a cash dividend of $50,000 on its common stock. No other dividends were paid or declared during 20X1.
• On April 15, 20X1, Bergen issued 2,000 shares of its common stock for land having a fair value of $100,000.
• On May 25, 20X1, Bergen borrowed $450,000 from an insurance company. The underlying promissory note bears interest at 15% and is payable in three equal annual installments of $150,000. The first payment is due on May 25, 20X2.
• On June 15, 20X1, Bergen purchased equipment for $392,000 cash.
• On July 1, 20X1, Bergen sold equipment costing $52,000, with a book value of $28,000, for $33,000 cash.
• On December 31, 20X1, Bergen leased equipment from Tilden Company for a 10-year period. Equal payments under the lease are $25,000 due on December 31 each year. The first payment was made on December 31, 20X1. The present value at December 31, 20X1, of the 10 lease payments is $158,000. Bergen appropriately recorded the lease as a finance lease. The $25,000 lease payment due on December 31, 20X2, will consist of $9,000 principal and $16,000 interest.
• Bergens net income for 20X1 is $253,000.
• Bergen owns a 10% interest in the voting common stock of Mason, Inc. Mason reported net income of $120,000 for the year ended December 31, 20X1, and paid a common stock dividend of $55,000 during 20X1.

Required:

Prepare a cash flow statement for Bergen using the indirect method for 20X1.