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.


  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?