Preparing and interpreting a statement of cash flows using a T account work sheet. Financial statement data for Dickerson Manufacturing Company for the current year. Additional information includes the following:
(1) Net income for the year was $568,000; dividends declared and paid were $60,000.
(2) Depreciation expense for the year was $510,000 on buildings and machinery.
(3) The firm sold for $25,000 machinery originally costing $150,000 with accumulated depreciation of $120,000.
(4) The firm retired bonds during the year at their book value.
a. Prepare a statement of cash flows for Dickerson Manufacturing Company for the year using the indirect method to compute cash flow from operations. Support the statement with a T account work sheet.
b. Comment on the pattern of cash flows from operating, investing, and financing activities.