Avatar Company Uses the Indirect Method to Prepare Its Statement

question 69

Essay

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following portion of the comparative balance sheet:
$$\begin{array} { | l | r | r | r | } \hline & { \mathbf { 2 0 1 4 } } &{ \mathbf { 2 0 1 3 } } & { \text { Increase/decrease } } \\\hline \text { Accounts payable } & \$ 4,000 & \$ 6,000 & \$ ( 2,000 ) \\\hline \text { Accrued liabilities } & 2,000 & 1,000 & 1,000 \\\hline \text { Long-term notes payable } & 84,000 & 90,000 & ( 6,000 ) \\\hline \text { Total liabilities } & \$ 90,000 & \$ 97,000 & \$ ( 7,000 ) \\\hline\end{array}$$
Additional information provided:
• During 2014, the company repaid $40,000 of long-term notes payable.
• During 2014, the company borrowed $34,000 on a new note payable.
Using the above information, please analyze the activity in the long-term notes payable account using the flowing T-account format:
Long-term notes payable
$$\begin{array} { | l | l | } \hline \quad \quad \quad \quad \quad \quad &90,000 \quad \quad \quad \quad \\\hline & \\\hline & \\\hline & \\\hline & \\\hline \end{array}$$

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