You are given the following information for Barko Industries:
Barko Industries
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
Barko Industries
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:
· Barko Industries 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:
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?
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