Hesselbaum Retail Corporation”s most recent Income Statement and comparative Balance Sheet is as follows:
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Hesselbaum Retail Corporation |
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Income Statement |
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For the Year Ended December 31, Year 2 |
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Sales |
$118,000 |
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Less cost of goods sold |
56,000 |
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Gross margin |
62,000 |
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|
37,000 |
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Net operating income |
25,000 |
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Less loss on sale of equipment |
2,000 |
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Income before taxes |
23,000 |
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Less income taxes |
9,000 |
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Net income |
$ 14,000 |
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Hesselbaum Retail Corporation |
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Comparative Balance Sheet |
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At December 31, Year 2, and Year 1 |
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Year 2 |
Year 1 |
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Assets |
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Cash |
$12,000 |
$ 4,000 |
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Accounts receivable, net |
29,000 |
7,000 |
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Merchandise inventory |
36,000 |
21,000 |
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Prepaid expenses |
6,000 |
8,000 |
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Equipment |
72,000 |
88,000 |
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Accumulated depreciation |
(60,000) |
(57,000) |
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Total assets |
$95,000 |
$71,000 |
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Liabilities and stockholders’ equity |
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Accounts payable |
$17,000 |
$ 9,000 |
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Wages payable |
6,000 |
1,000 |
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Taxes payable |
2,000 |
3,000 |
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Common stock |
50,000 |
42,000 |
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Retained earnings |
20,000 |
16,000 |
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Total liabilities and stockholders’ equity |
$95,000 |
$71,000 |
No direct exchange transactions occurred at Hesselbaum during Year 2. No equipment was purchased during Year 2. The accumulated depreciation on the equipment soldwas $9,000. Cash dividends of $10,000 were declared and paid during Year 2. Hesselbaum uses the direct method to prepare its statement of cash flows.
Required:
Prepare Hesselbaum”s operating activities section of its Year 2 statement of cash flows.