Hesselbaum Retail Corporation”s most recent Income Statement and comparative Balance Sheet is as follows:
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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 |
| Less cost of goods sold | 56,000 |
| Gross margin | 62,000 |
|
| 37,000 |
| Net operating income | 25,000 |
| Less loss on sale of equipment | 2,000 |
| Income before taxes | 23,000 |
| Less income taxes | 9,000 |
| Net income | $ 14,000 |
| Hesselbaum Retail Corporation | ||
| Comparative Balance Sheet | ||
| At December 31, Year 2, and Year 1 | ||
|
| Year 2 | Year 1 |
| Assets |
|
|
| Cash | $12,000 | $ 4,000 |
| Accounts receivable, net | 29,000 | 7,000 |
| Merchandise inventory | 36,000 | 21,000 |
| Prepaid expenses | 6,000 | 8,000 |
| Equipment | 72,000 | 88,000 |
| Accumulated depreciation | (60,000) | (57,000) |
| Total assets | $95,000 | $71,000 |
| Liabilities and stockholders’ equity |
|
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| Accounts payable | $17,000 | $ 9,000 |
| Wages payable | 6,000 | 1,000 |
| Taxes payable | 2,000 | 3,000 |
| Common stock | 50,000 | 42,000 |
| Retained earnings | 20,000 | 16,000 |
| 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.
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