Question:The comparative balance sheets for Hinckley Corporation show the following information.
| December 31
|
| 2017 | 2016 |
Cash | \(33,500 | \)13,000 |
Accounts receivable | 12,250 | 10,000 |
Inventory | 12,000 | 9,000 |
Available-for-sale debt investment | 0 | 3,000 |
Building | 0 | 29,750 |
Equipment | 45,000 | 20,000 |
Patents | 5,000 | 6,250 |
| \(107,750 | \)91,000 |
| | |
Allowance for doubtful accounts | \(3,000 | \)4,500 |
Accumulated depreciation – equipment | 2,000 | 4,500 |
Accumulated depreciation – building | 0 | 6,000 |
Accounts payable | 5,000 | 3,000 |
Dividend payable | 0 | 5,000 |
Notes payable, short-term (non-trade) | 3,000 | 4,000 |
Long-term note payable | 31,000 | 25,000 |
Common stock | 43,000 | 33,000 |
Retained earnings | 20,750 | 6,000 |
| \(107,750 | \)91,000 |
Additional data related to 2017 are as follows.
1. Equipment that had cost \(11,000 and was 40% depreciated at time of disposal was sold for \)2,500.
2. \(10,000 of the long-term note payable was paid by issuing common stock.
3. Cash dividends paid were \)5,000.
4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were \(30,000 (net of \)2,000 taxes).
5. Investments (available-for-sale) were sold at \(1,700 above their cost. The company has made similar sales and investments in the past.
6. Cash was paid for the acquisition of equipment.
7. A long-term note for \)16,000 was issued for the acquisition of equipment.
8. Interest of \(2,000 and income taxes of \)6,500 were paid in cash.
Instructions
Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country
