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haron Feldman, president of Allied Products, considers $20,000 to be a minimum cash balance for operating purposes.

haron Feldman, president of Allied Products, considers $20,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $15,000 in cash was available at the end of 2008. Since the company reported a large net income for the year, and also issued bonds and sold some long-term investments, the sharp decline in cash is puzzling to Ms. Feldman.
Allied Products
Comparative Balance Sheet
December 31, 2008, and 2007

2008
2007
Assets




Current assets:




Cash
$
15,000
$
33,000
Accounts receivable

300,000

210,000
Inventory

250,000

196,000
Prepaid expenses

7,000

15,000
Total current assets

572,000

454,000
Long-term investments

90,000

120,000
Plant and equipment

860,000

750,000
Less accumulated depreciation

210,000

190,000
Net plant and equipment

650,000

560,000
Total assets
$
1,312,000
$
1,134,000
Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable
$
275,000
$
230,000
Accrued liabilities

8,000

15,000
Total current liabilities

283,000

245,000
Bonds payable

200,000

100,000
Deferred income taxes

42,000

39,000
Total liabilities

525,000

384,000
Stockholders' equity:




Common stock

595,000

600,000
Retained earnings

192,000

150,000
Total stockholders' equity

787,000

750,000
Total liabilities and stockholders' equity
$
1,312,000
$
1,134,000

Allied Products
Income Statement
For the Year Ended December 31, 2008
Sales


$
800,000
Cost of goods sold



500,000
Gross margin



300,000
Selling and administrative expenses



214,000
Net operating income



86,000
Non operating items:




Gain on sale of investments
$
20,000


Loss on sale of equipment

6,000

14,000
Income before taxes



100,000
Income taxes



30,000
Net income


$
70,000
The following additional information is available for the year 2008:
a.
The company sold long-term investments with an original cost of $30,000 for $50,000 during the year.
b.
Equipment that had cost $90,000 and on which there was $40,000 in accumulated depreciation was sold during the year for $44,000.
c.
Cash dividends totaling $28,000 were declared and paid during the year.
d.
The stock of a dissident stockholder was repurchased for cash and retired during the year. No issues of stock were made.
Required
Using the indirect method, prepare a statement of cash flows for 2008.

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