Use the Following Information to Prepare a Statement of Cash

question 56

Essay

Use the following information to prepare a statement of cash flows (indirect method)for Sink Industries for the year ended December 31,2010:
Net income for the year 2010 was $5,000.Accounts receivable decreased $2,000,while inventories increased $4,000,and accounts payable decreased $7,000.Depreciation expense included in net income was $8,000.
During the year,a piece of land held for future expansion was sold for its book value of $8,000 and a new service truck was purchased for $14,000.
The company borrowed $18,000 on a two-year note from the bank.Dividends of $6,000 were paid in cash.Preferred stock was issued to retire $7,000 of long-term notes payable.
The beginning cash balance was $10,000 and the ending balance was $20,000. 

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Definitions:

Secondary Hydrogens

Hydrogen atoms attached to a secondary carbon, which is a carbon atom connected to two other carbon atoms in an organic molecule.

Monobrominated Product

A compound resulting from the substitution reaction where one hydrogen atom in a molecule is replaced by a bromine atom.

Ethylcyclohexane

A chemical compound consisting of a cyclohexane ring with an ethyl group attached to one of its carbons.

2,2,4-Trimethylpentane

An organic compound, also known as isooctane, widely used as a reference standard fuel in the octane rating of gasoline.