Use the Following Financial Statements and Additional Information to (1)prepare

question 234

Essay

Use the following financial statements and additional information to (1)prepare a statement of cash flows for the year ended December 31,Year 2 using the indirect method,and (2)compute the company's cash flow on total assets ratio for Year 2.
Additional Information
a.A $20,000 note payable is retired at its carrying value in exchange for cash.
b.The only changes affecting retained earnings are net income and cash dividends paid.
c.New equipment is acquired for $120,000 cash.
d.Received cash for the sale of equipment that had cost $85,000,yielding a gain of $4,700.
e.Prepaid expenses relate to Other Expenses on the income statement.
f.All purchases and sales of merchandise inventory are on credit.

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Definitions:

Letterhead

Pre-printed stationary with a company's or individual's name and contact information, used for official correspondence.

Complete Legal Name

The full name of an individual as recognized legally, including first, middle, last names, and any suffixes or prefixes.

Company'S Objective

The explicit goals or aims that a company intends to achieve, guiding its business strategies and decisions.

Transparent

A property of materials or objects that allows light to pass through them without being absorbed, making them see-through or invisible.