Part One: Statement of Cash Flows Analysis

You are given the following information for Barko Industries:


Barko Industries


Balance Sheet (Partial)


Year 3

Year 4

Cash
$70,000

$9,640

AR
70,000

85,000

Inventories
87,000

84,000

Accounts Payable
48,000

51,000




Barko Industries


Income Statement


For the Year Ending December 31, Year 4

Sales

$560,000

Operating Expenses
$420,000


Depreciation Expense
46,000

466,000

Income Before Taxes

$94,000

Income Tax Expense

$37,600

Net Income


$56,400


Other Data:
•Barko Industries sold an asset and recorded a loss on the sale of $8.700. The sale price was $220,000 and the asset was originally purchased for $360,000.

• Dividends paid in Year 4 were $22, 460.

Required:
1.Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method.
2.What conclusions could you arrive at regarding the cash position of the firm?
3.What information was provided in the statement of cash flows that was not evident if just the balance sheet and the income statement were examined?