The comparative balance sheet of Hobson Medical Equipment Inc. for December 31, 2013 and 2012, is as follows:

The following additional information is taken from the records:
a. Land was sold for $75.
b. Equipment was acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $195 credit to Retained Earnings for net income.
f. There was a $60 debit to Retained Earnings for cash dividends declared.
Respond to the following:
a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
b. Was Hobson Medical Equipment€™s cash flow from operations more or less than net income? What is the source of thisdifference?

Transcribed Image Text:

Dec. 31, 2013 Dec. 31, 2012 Assets 96 120 168 105 135 ....$906 Inventories 270 105 (18) $639 Equipment.. . Total ...._. .. . Liabilities and Stockholders'Equity S 96 Common stock, $10 par.. . . Paid-in capital in excess of par-common stock 60 150 573 .$906 30 75 438 $639 Total