You have completed field work in connection with your audit of Alexander Corporation for the year ended December 31, 2014. The balance sheet accounts at the beginning and end of the year are shown below.

		December 31, 2014		December 31, 2013			Increase or (Decrease)
Money		$664,181		$712,220			($48,039	)
accounts receivable		1,121,923		843,670			278,253
Inventory		1,772,663		1,457,900			314,763
Prepaid expenses		28,680		19,120			9,560
Investment in subsidiary		264,095		0			264,095
Life insurance cash surrender value		5,507		4,302			1,205
Machinery		494,730		454,100			40,630
Buildings		1,279,128		974,881			304,247
Tierra		125,475		125,475			0
patents		164,910		152,960			11,950
Copyright		95,600		119,500			(23,900	)
Bond discount and issuance cost		10,760		0			10,760
		$6,027,652		$4,864,128			$1,163,524
Accrued taxes payable		$215,698		$190,244			$25,454
Accounts payable		715,279		669,200			46,079
payable dividends		167,300		0			167,300
Bonds Payable—8%		298,750		0			298,750
Bonds Payable—12%		0		239,000			(239,000	)
Allowance for doubtful accounts		84,367		95,600			(11,233	)
Accumulated Depreciation—Buildings		1,013,360		956,000			57,360
Accumulated Depreciation—Machinery		413,470		310,700			102,770
Premium on bonds payable		0		5,736			(5,736	)
Common Stock, Peerless		2,811,118		3.473.148			(662,030	)
Paid-in capital in excess of par: common shares		260,510		0			260,510
Retained Earnings: Unallocated		47,800		(1.075.500	)		1,123,300
		$6,027,652		$4,864,128			$1,163,524

RETAINED EARNINGS STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014
January	1, 2014		Balance (deficit)		$(1,075,500	)
March	31, 2014		Net income for the first quarter of 2014		59,750
April	1, 2014		Transfer of paid-up capital		1,015,750
			Balance		0
December	31, 2014		Net profit for the last three quarters of 2014		215,100
			Dividend declared—payable January 21, 2013		(167,300	)
			Balance		$47,800

Your audit working papers contain the following information:

1.		On April 1, 2014, the existing shortfall against paid-in capital created by reducing the declared value of shares without par value was cancelled.
2.		On November 1, 2014, 70,744 unmatched shares were sold for $614,230. The board of directors voted to consider $5 per share as declared capital.
3.		A patent was purchased for $35,850.
4.		During the year, machinery was sold for $21,510 that had a base cost of $39,196 and had an accumulated depreciation of $12,428. No other plant assets were sold during the year.
5.		The 20-year 12% bonds were dated and issued on January 2, 2002. Interest was payable on June 30 and December 31. Originally sold at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2014.
6.		The 40-year 8% bonds were dated January 1, 2014 and sold on March 31 at 97 plus accrued interest. Interest is payable semi-annually on June 30 and December 31. The issuance expense was $2,005.
7.		Alexander Corporation acquired 70% control in the Crimson Company on January 2, 2014 for $239,000. Crimson Company's income statement for 2014 shows net income of $35,850.
8.		Extraordinary repairs to buildings of $17,208 were charged to Accumulated Depreciation—Buildings.
9.		Interest paid in 2014 was $25,095 and income taxes paid were $81,260.

Based on the information provided, prepare a statement of cash flows using the indirect method. The company uses straight-line amortization for the interest on the bonds. 

Answer rating: 100% (QA)

To prepare the statement of cash flows using the indirect method we need to analyze the changes in v... View the full answer