Question

The comparative balance sheets and income statements for Munoz Company follow:

Balance Sheets
As of December 31
	Year 2				Year 1
Assets
Cash	$	22,554			$	2,987
Accounts receivable		1,813				1,088
Inventory		6,503				6,097
Equipment		19,699				43,369
Accumulated depreciation—equipment		(5,974	)			(15,475	)
Land		19,269				9,039
Total assets	$	63,864			$	47,105
Liabilities and equity
Accounts payable (inventory)	$	2,738			$	4,423
Long-term debt		2,860				6,538
Common stock		25,200				11,500
Retained earnings		33,066				24,644
Total liabilities and equity	$	63,864			$	47,105

Income Statement
For the Year Ended December 31, Year 2
Sales revenue	$	33,020
Cost of goods sold		(13,088	)
Gross margin		19,932
Depreciation expense		(3,817	)
Operating income		16,115
Gain on sale of equipment		800
Loss on disposal of land		(70	)
Net income	$	16,845

Additional Data

1. During Year 2, the company sold equipment for $18,582; it had originally cost $31,100. Accumulated depreciation on this equipment was $13,318 at the time of the sale. Also, the company purchased equipment for $7,430 cash.

2. The company sold land that had cost $3,470. This land was sold for $3,400, resulting in the recognition of a $70 loss. Also, common stock was issued in exchange for title to land that was valued at $13,700 at the time of exchange.

3. Paid dividends of $8,423.

Required

Prepare a statement of cash flows using the indirect method.

Answer 1