The Following Information Is Available for the Ehrens Corporation

question 16

Essay

The following information is available for the Ehrens Corporation:
$\begin{array}{c} \text { EHRENS CORPORATION }\\ \text { Balance Sheets }\\ \text { At December 31 }\\\begin{array}{|l|r|r|}\hline&2013&2012\\\hline \text { Assets: }\\\hline \text { Cash }\\\hline \text { Accounts receivable } & 32,180 & 29,400 \\\hline \text { Merchandise inventory } & 73,125 & 61,710 \\\hline \text { Long-term investments } & 55,900 & 56,400 \\\hline \text { Equipment } & 175,500 & 145,500 \\\hline \text { Accumulated depreciation } & (33,550) & (31,200) \\\hline \text { Total assets } & \$ 327,795 & \$ 284,850 \\\hline\\\hline \text { Liabilities: }\\\hline \text { Accounts payable } & \$ 65,000 & \$ 40,380 \\\hline \text { Incomestaxes payable } & 10,725 & 10,200 \\\hline \text { Bonds payable } & \underline{48,750} & \underline{66,000} \\\hline \text { Total liabilities } & \$ 124,475 & \$ 116,580\\\hline \text { Equity: }\\\hline\text { Common stock } & 117,000 & 96,000 \\\hline \text { Contributed capital in excess of pay } & 13,000 & 9,000 \\\hline \text { Retained earnings } & \underline{73,320} & \underline{63,270} \\\hline \text { Total equity } & \underline{\$ 203,320} & \underline{\$ 168,270} \\\hline \text { Total liabilities and equity } & \$ 327,795 & \$ 284,850 \\\hline\end{array}\end{array}$

$\begin{array}{c}\text { EHRENS CORPORATION }\\\text { Income Statement }\\\text { For Year Ended December 31, 2013 }\\\begin{array}{|l|r|r|}\hline \text { Sales } & & \$ 240,000 \\\hline \text { Cost of goods sold } & \$ 80,900 & \\\hline \text { Depreciation expense } & 29,400 & \\\hline \text { Other operating expenses } & 48,000 & \\\hline \text { Interest expense } & 2,000 & (160,300) \\\hline \text { Other gains (losses): } & & \\\hline \quad \text { Loss on sale of equipment } & & (8,400) \\\hline \text { Income before taxes } & & 71,300 \\\hline \text { Income taxes expense } & & 27,650 \\\hline \text { Net income } & &\$ 43,650 \\\hline\end{array}\end{array}$
Additional information:
(1)There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.
(2)Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3)New equipment was purchased for $67,550 cash.
(4)Cash dividends of $33,600 were paid.
(5)Additional shares of stock were issued for cash.
Prepare a statement of cash flows for the 2013 calendar year using the indirect method.

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