89Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014.
Comparative Balance Sheet
2014
2013
Increase/decrease
Cash$ 21,000$ 18,000$ 3,000
Accounts receivable31,00035,000(4,000)
Inventory53,00025,00028,000
PP&E, net120,00090,00030,000
Total assets$225,000$168,000$57,000
Accounts payable$ 4,000$ 6,000$(2,000)
Accrued liabilities2,0001,0001,000
Long-term notes payable84,00090,000(6,000)
Total liabilities$90,000$97,000$(7,000)
Common stock30,0002,00028,000
Retained earnings113,00074,00039,000
Treasury stock(8,000)(5,000)(3,000)
Total equity$135,000$71,000$64,000
Total liabilities and equity$225,000$168,000$57,000
Income Statement
Sales revenue$240,000
Interest revenue1,000
Gain on sale of plant assets4,000
Total revenues and gains$245,000
Cost of goods sold110,000
Salary expense45,000
Depreciation expense12,000
Other operating expenses23,000
Interest expense1,000
Income tax expense5,000
Total expenses$196,000
Net income/(loss)$ 49,000
Statement of Retained Earnings
Retained earnings, January 1, 2013$74,000
Net income49,000
Dividends(10,000)
Retained earnings, December 31, 2013$113,000
Additional information provided:
?Equipment costing $52,000 was purchased for cash.
?Equipment with a net asset value of $10,000 was sold for $14,000
?Depreciation expense of $12,000 was recorded during the year.
?During 2014, the company repaid $40,000 of long-term notes payable.
?During 2014, the company borrowed $34,000 on a new note payable
?There were no stock retirements during the year.
?There were no sales of treasury stock during the year.
Please prepare a complete statement of cash flows using the following format:
Avatar Company
Statement of Cash Flows
Year Ended December 31, 2014