Reference no: EM131817592

Problem - Presented below is the comparative trial balance and additional information for The IT Crowd Ince. Credit balances are shown in brackets.

                                              2006                  2005

cash                                        $  10,000           $(5,000)

accounts receivalbe                  24,000               21,000

inventory                                 5,000                 7,000

prepaid expenses                     1,000                 500

equipment                               42,000                35,000

accumulated amortization         (10,000)              (7,000)

accounts payable                     (17,000)              (10,000)

salaries payable                       (3,000)               0

income taxes payable               (1,000)               0

note payable                            (10,000)             (12,000)

common shares                        (5,000)              (4,000)

retained earnings                      (24,500)            (14,900)

dividends                                  5,000                5,000

revenue                                    (177,000)          (145,000)

purchases                                 56,000              43,000

salaries expense                        69,000             55,000

operating expenses                    31,000             29,000

interest expense                        500                 600

income tax expense                   3,000             2,800

gain on disposal of equipment     1,000             0

Additional information:

1. New equipment costing $8,000 was purchased for cash in 2006

2. Old equipment costing $3,000 was sold for $2,000 cash when the book value was $1,000

3. A cash dividend of $5,000 was paid during the year.

4. Accounts payalbe pertain to merchandise purchases.

Required: Prepare a cash flow statement using the indirect method.