Statement of cash flows—indirect method

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments  to  reconcile  net  income  to net

$360,000

cash  flow  from  operating activities:

Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,800

Gain on sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,280

Changes in current operating assets and liabilities:

Increase in accounts receivable. . . . . . . . . . . . . . . . . . . . .  .

27,360

Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(36,000)

Increase in accounts payable . . . . . . . . . . . . . . . . . . . . . . .  .

(3,600)

Decrease in accrued expenses payable . . . . . . . . . . . . . . .

      (2,400)

Net cash flow from operating activities . . . . . . . . . . . . . . . . . . .

$ 463,440

Cash received from sale of investments . . . . . . . . . . . . . . . . . . .

Less: Cash paid for purchase of land . . . . . . . . . . . . . . . . . . . . . .

$259,200

$240,000

Cash paid for purchase of equipment . . . . . . . . . . . . . . . .

  432,000

  691,200

Net cash flow used for investing activities . . . . . . . . . . . . . . . . .

Cash  flows  from  financing activities:

(415,200)

Cash received from sale of common stock . . . . . . . . . . . . . . . . .

$312,000

Cash paid for dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  132,000

Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . .

  180,000

Increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  47,760

Cash at the end of the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

192,240

Cash at the beginning of the year. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$240,000