ESSAY. Write your answer in the space provided or on aseparate sheet of paper.
12) Nashville Records Company uses the indirect method toprepare its statement of cash flows. Refer to the followingsections of the comparative balance sheet:
Nashville Records Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018 2017 Increase (Decrease)
AccountsPayable $6,000 $9,000 $(3,000)
AccruedLiabilities 3,000 1,500 1,500
Long-term NotesPayable 126,000 135,000 (9,000)
TotalLiabilities $135,000 $145,500 $(10,500)
CommonStock 45,000 3,000 42,000
RetainedEarnings 169,500 111,000 58,500
TreasuryStock (12,000) (7,500) (4,500)
TotalEquity 202,500 106,500 96,000
Total Liabilities and Stockholders'Equity $337,500 $252,000 $85,500
Additional information for 2018:
• No stock was retired.
• No treasury stock was sold.
• The company repaid $60,000 of long-termnotes payable.
• The company borrowed $51,000 on a newlong-term note payable.
• Net income for the year was $68,000.
