The comparative balance sheets for Hinckley Corporation show the following information.\nDecember 31 2014 2013\nCash $ 33,500 $13,000\nAccounts receivabl
The comparative balance sheets for Hinckley Corporation show the following information.
\r\nDecember 31 2014 2013
\r\nCash $ 33,500 $13,000
\r\nAccounts receivable 12,250 10,000
\r\nInventory 12,000 9,000
\r\nInvestments –0– 3,000
\r\nBuildings –0– 29,750
\r\nEquipment 45,000 20,000
\r\nPatents 5,000 6,250
\r\n$107,750 $91,000
\r\nAllowance for doubtful accounts $ 3,000 $ 4,500
\r\nAccumulated depreciation—equipment 2,000 4,500
\r\nAccumulated depreciation—building –0– 6,000
\r\nAccounts payable 5,000 3,000
\r\nDividends payable –0– 5,000
\r\nNotes payable, short-term (nontrade) 3,000 4,000
\r\nLong-term notes payable 31,000 25,000
\r\nCommon stock 43,000 33,000
\r\nRetained earnings 20,750 6,000
\r\n$107,750 $91,000
\r\nAdditional data related to 2014 are as follows.
\r\n1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500.
\r\n2. $10,000 of the long-term note payable was paid by issuing common stock.
\r\n3. Cash dividends paid were $5,000.
\r\n4. On January 1, 2014, the building was completely destroyed by a flood. Insurance proceeds on the building were $30,000 (net of $2,000 taxes).
\r\n5. Investments (available-for-sale) were sold at $1,700 above their cost. The company has made similar sales and investments in the past.
\r\n6. Cash was paid for the acquisition of equipment.
\r\n7. A long-term note for $16,000 was issued for the acquisition of equipment.
\r\n8. Interest of $2,000 and income taxes of $6,500 were paid in cash.
\r\nInstructions
\r\nPrepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country.