Question 2 (80 Points) Selected information from the accounting records of Cervelo appears below. Cervelo uses a calendar year as its reporting period. You are asked to generate a Statement of Cash Flows for Cervelo for 2023, using the indirect method. 1. Net income for 2023 is $90,000. 2. Beginning and ending balances in three accounts relating to the firm's customers were as follows: Dec. 31, 2022 Dec. 31, 2023 Accounts Receivable (gross) $41,000 $53,000 Allowance for Uncollectible Accounts 1,800 3,200 Advances from Customers 3,700 1,000 On November 1, 2023, a customer gave Cervelo a six-month, 8 percent, $15,000 note in satisfaction of an account receivable of $15,000. Interest is payable at maturity. This was the only note receivable held by Cervelo during 2023. 3. The balances in Merchandise Inventory and Accounts Payable were as follows: Dec. 31, 2022 Dec. 31, 2023 Accounts Payable $27,000 $39,000 Merchandise Inventory 47,000 43,000 4. During 2023 Cervelo sold, for $25,000 cash, equipment with a net book value of $38,000. Cervelo also purchased equipment for cash. Depreciation expense for 2023 was $42,000. The balance in the Equipment account at acquisition cost decreased $26,000 between the beginning and the end of 2023. The balance in the Accumulated Depreciation account increased $11,000 between the beginning and the end of 2023. 5. The balances in the Leasehold Asset and Lease Liability accounts were as follows on various dates: Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Leasehold Asset (net) $0 $76,000 $71,000 Lease Liability 0 76,000 73,600 On December 31, 2022, Cervelo signed a long-term lease, which, by its terms, qualified as a finance lease. (This means that Cervelo recorded an asset in the amount of $76,000, amortized over the lease life, and a liability, in the same amount, which is treated, accounting wise, like a bond.) Cervelo made a payment under the lease of $10,000 on December 31, 2023. Page 5 out of 10 6. Cervelo declared cash dividends during 2023 of $26,000, of which $10,000 remains unpaid on December 31, 2023. During 2023, Cervelo paid $8,000 cash for dividends declared during 2022. 7. During 2023 Cervelo sold securities that had originally cost $4,500, for $9,100 cash. 8. Investors in $100,000 face value of convertible bonds of Cervelo converted them into 8,000 shares of Cervelo Inc. common stock during 2023. The common stock had a market value of $15 per share on the conversion date. Cervelo had originally issued the bonds at a premium. Their book value on the date of the conversion was $105,000. Cervelo chose to record the issuance of the common stock at market value and recognized a loss of $15,000 (acceptable under GAAP - but not the most common approach). Cervelo amortized $1,500 of the bond premium between January 1, 2023 and the date of the conversion. Required: Generate a Statement of Cash Flows for Cervelo for 2023. Use the indirect method.