Toys Galore Company provided the following balance sheet and income statement information:

Balance Sheet at December 31	Year 2	Year 1
Cash	$ 1,400	$ 6,000
Accounts receivable	13,500	12,000
Inventory	9,800	4,500
Prepaid insurance	1,200	900
Equipment, net	35,700	38,000
Total assets	$61,600	$61,400
Accounts payable	$ 13,100	$ 12,600
Wages payable	7,400	8,000
Long-term note payable	17,000	25,500
Common stock	15,000	8,000
Retained earnings	9,100	7,300
Total liabilities & shareholders' equity	$61,600	$61,400

Income Statement for Year 2
Sales	$ 101,500
Cost of goods sold	49,500
Depreciation expense	5,700
Other operating expenses	27,800
Impairment loss on equipment	2,200
Interest expense	2,100
Income taxes expense	6,000
Net income	$ 8,200

Using the financial data for Toys Galore Company and the table on the following page, prepare the statement of cash flow using the indirect method for Year 2 (assume there were no equipment disposals/sales during the year).

Answer rating: 100% (QA)

ANSWER To prepare the statement of cash flows using the indirect method for Toys Galore Company for Year 2 we start with the net income and adjust it ... View the full answer