Audio City, Inc., is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below:
Additional Data:
a. Bought equipment for cash, $ 73,000.
b. Paid $ 15,000 on the long- term note payable.
c. Issued new shares of stock for $ 30,000 cash.
d. Dividends of $ 5,000 were paid in cash.
e. Other expenses included depreciation, $ 15,000; salaries and wages, $ 20,000; taxes, $ 25,000.
f. Accounts Payable includes only inventory purchases made on credit. Because a liability relating to taxes does not exist, assume that they were fully paid in cash.
Required:
1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method.
2. Evaluate the statement of cash flows.