Problem - A comparative balance sheet for Joseph Corporation is presented below:
James CORPORATION Comparative Balance Sheet
2005 2004
Assets
Cash $ 45,000 $ 57,000
Accounts receivable (net) 72,000 64,000
Inventory 132,000 147,000
Prepaid insurance 12,140 16,450
Land 125,000 150,000
Equipment 200,000 175,000
Accumulated depreciation (equipment ) (60,000) (49,000)
Building 250,000 250,000
Accumulated depreciation (Building ) (75,000) (50,000)
Total Assets $701,140 $760,540
Liabilities and Stockholders' Equity
Accounts payable $ 44,000 $ 45,000
Bonds payable 235,000 265,000
Common stock 280,000 200,540
Retained earnings 142,140 200,540
Total liabilities and stockholders' equity $701,140 $760,540
Additional information:
1. Operating expense include depreciation expense of $60,000 and charges from prepaid expenses of 4,400
2. Cash dividends of $105,290 were declared and paid.
3. Land was sold for cash at cost.
4. Equipment was purchased for $65,000 cash. In additional, equipment costing $40,000 with a book value of$16,000 was sold for $14,000 cash.
5. Bonds were converted at face value by issuing 30,000 shares of $1 par value common stock.
6. Net income for 2005 was $46,890.
7. Net sale in 2005 were $367,000.
Instructions - Prepare a statement of cash flows for the year ended 2005, using the indirect method.