Question

Financial data is available from the accounts of Tarralo Corporation:

		12/31/20	12/31/19
	Cash	36,000	25,000
	Accounts receivable, net	143,000	118,000
	Inventory	130,000	140,000
	Prepaid rent	11,000	10,000
	Machinery	189,000	170,000
	Accumulated depreciation-Machinery	(90,000)	(70,000)
	Equipment	175,000	190,000
	Accumulated depreciation-Equipment	(60,000)	(45,000)
		534,000	538,000
	Accounts payable	18,000	28,000
	Salaries payable	10,000	17,000
	Accrued expenses	8,000	18,000
	Income taxes payable	10,000	13,000
	Bonds payable	200,000	200,000
	Discount on bonds payable	(7,000)	(8,000)
	Common stock	210,000	200,000
	Retained earnings	85,000	70,000
		534,000	538,000
		FY 2020
	Sales	650,000
	Cost of goods sold	395,000
	Selling expenses	105,000
	Administrative expenses	88,000
	Interest expense	29,000
	Gain on the sale of equipment	4,000
	Income tax expense	12,000

Additional information:

1. All depreciation is included in selling expenses.
2. Old equipment with an original cost of $40,000 was sold for $15,000.

Required: Prepare a Statement of Cash Flows for Tarralo Corporation for the year ended 12/31/20 using the indirect method. Include required disclosures.

Answer 1

**It is assumed that cash dividends are paid

Purchase of Machinery & Machinery equipment are seperately shown.