Dingel Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information.

December 31
	2017	2016
Buildings	\( –0–	\)29,750
Equipment	45,000	20,000
Patents	5,000	6,250
Investments	–0–	3,000
Inventory	12,000	9,000
Accounts receivable	12,250	10,000
Cash	33,500	13,000
	\(107,750	\)91,000
Share capital—ordinary	\( 43,000	\)33,000
Retained earnings	20,750	6,000
Allowance for doubtful accounts	3,000	4,500
Accumulated depreciation on equipment	2,000	4,500
Accumulated depreciation on buildings	–0–	6,000
Accounts payable	5,000	3,000
Dividends payable	–0–	5,000
Long-term notes payable	31,000	25,000
Notes payable, short-term (non-trade)	3,000	4,000
	\(107,750	\)91,000

Additional data related to 2017 are as follows.

1. Equipment that had cost \(11,000 and was 40% depreciated at the time of disposal was sold for \)2,500.
2. \(10,000 of the long-term notes payable was paid by issuing ordinary shares.
3. Cash dividends paid were \)5,000.
4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were \(32,000.
5. Equity investments (non-trading) were sold at \)1,700 above their cost.
6. Cash was paid for the acquisition of equipment.
7. A long-term note for \(16,000 was issued for the acquisition of equipment.
8. Interest of \)2,000 and income taxes of $6,500 were paid in cash.

Instructions Prepare a statement of cash flows using the indirect method.

Cash flow from operating activities

Net Income

$14,750

Adjustment to reconcile net income to net

cash provided by operating activities:

Loss on sale of equipment

$4,100

Gain from flood damage

(8,250)

Depreciation expense

1,900

Patent amortization

1,250

Gain on sale of equity investment

(1,700)

Increase in accounts receivables (net)

(3,750)

Increase in inventory

(3,000)

Increase in account payable activities

2,000

(7,450)

7,300

Cash flow from investing activities

Sale of equity investment

4,700

Sale of equipment

2,500

Purchase of equipment (cash)

(20,000)

Proceeds from flood damage to building

32,000

Net cash provided by investing activities

19,200

Cash flow from financing activities

Payment of dividends

(5,000)

Payment of short-term note payable

(1,000)

Net cash used for financing activities

(6,000)

Increase in cash

20,500

Cash, January 1, 2017

13,000

Cash, December 31, 2017

$33,500

Cash paid during the year for:

Interest

$2,000

Income taxes

$6,500

Retired note payable by issuing ordinary shares

$10,000

Purchased equipment by issuing notes payable

16,000

Ending retained earnings

$20,750

Beginning retained earnings

(6,000)

Net income

$14,750

Cost

$11,000

Accumulated depreciation

(4,400)

Book value

6,600

Proceeds from sale

(2,500)

Loss on sale

$4,100

Cost

$29,750

Accumulated depreciation

(6,000)

Book value

23,750

Proceeds from insurance

(32,000)

Gain from flood damage

($8,250)

Accumulated depreciation on equipment sold

$4,400

Decrease in accumulated depreciation

(2,500)

Depreciation expense

$1,900