Here is the balance sheet accounts for abc company:


December 31 2009 December 31 2008
Assets:
Cash 46000 51000
A/R 75000 82000
Inventories 92000 83000
Land 55000 30000
Equipment 230000 200000
Accumulated Amort.
0n Equipment (85000) (80000)

Total 413000 366000

Liabilities and Equity:
A/P 22000 25000
Bond Payable 75000 100000
Common Shares 85000 60000
Retained Earnings 231000 181000

Total 413000 366000

Additional Information:

1. net income for the year ended dec 31 2009 was $60000

2. Cash dividends were declared and paid during 2009.

3. Equipment with an original cost of $40000 and with accumulated amortization of $20000 was sold for a gain of $5000 during 2009.

4. Bonds payable amounting to $25000 were retired in 2007 through the issuance of common shares.

Prepare a statement of cash flows for 2009 using the indirect method.


Here is what I came up with but I am off by $5000:

Net Income 60000

Adjustments to reconcile net income to
Net cash provided by operating
Activities:

Amortization Expense 5000
Gain on Sale of Equipment (5000)
Decrease in A/R 7000
Increase in Inventories (9000)
Decrease in A/P (3000) (5000)
Net cash from operating activities 55000

Investing Cash Flows:

Purchase of Equipment (30000)
Purchase of land (25000)
Net cash used by investing activities (55000)

Cash flows used by financing
Payment of Cash dividends (10000)
Net cash used in financing (10000)

Net decrease in Cash (10000)
Cash at beginning of year 51000
Cash at end of year (41000)?? It should be $46000??

I have made amendments for you:
Net Income 60000

Adjustments to reconcile net income to
Net cash provided by operating
Activities:

Amortization Expense 25000 - [You forgot depreciation on equipment sold]
Gain on Sale of Equipment (5000)
Decrease in A/R 7000
Increase in Inventories (9000)
Decrease in A/P (3000)
Net cash from operating activities 75000

Investing Cash Flows:

Purchase of Equipment (70000) [You forgot the cost of equipment sold]
Purchase of land (25000)
Sales proceeds of equipment 25000 [You forgot the sales proceeds of equipment sold]
Net cash used by investing activities (70000)

Cash flows used by financing
Payment of Cash dividends (10000)
Net cash used in financing (10000)

Net decrease in Cash (5000)
Cash at beginning of year 51000
Cash at end of year $46000??