You are given the following information for the ABC Corporation:
ABC Corporation | ||
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 |
ABC Corporation | ||
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:
- The ABC corporation 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:
- Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method.
- What conclusions could you arrive at regarding the cash position of the firm?
- 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?