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The Murdock Corporation (MC) reported the following balance sheet data for 2022 and 2021 Additional information for 2022: (1.) Sold available-for-sale debt securities costing $69,500 for $74,000. (2.) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000. (3.) Issued 6% bonds payable at face value, $200,000. (4.) Purchased new equipment for $145,000cash. (5.) Paid cash dividends of $20,000. (6.) Net income was $50,000. Required: Use the indirect method to prepare a statement of cash flows (SCF) for 2022. In addition, answer all the following questions. 1) For the additional information provided above, show all the journal entries and classify each transaction in the correct category (operating, investing, financing). 2) Using a T-account, show how to estimate the depreciation expense for 2021. 3) Using a T-account, show how to reconcile the Retained Earnings account. 4) What do you observe about MC's financial health from reviewing its SCF? - How well is MC managing its cash position? (some comments can include: is MC operation generating enough cash?; can MC pay its debt obligations and have enough funds to pay its operating expenses?; how is it spending its cash?; how can MC improve its financial position?) - MC is planning to expand its operation and has applied for a loan of $250,000 from your bank. You are the loan officer who evaluates the financial statements and MC's loan application awaits your final approval. After reviewing the SCF, would you grant the loan and why? 5) The SCF was issued in direct response to FASB Concept Statement I, which stated that the primary objective of financial reporting is to "provide information to help investors and creditors, and other assess the amounts, timing, and uncertainty of prospective net cash inflows to the related enterprise." Do you agree with this statement? If so, in your opinion, which category is the most important and why? \begin{tabular}{|c|c|c|} \hline Cash flows from operating activities: & & \\ \hline Net income & & \\ \hline \multicolumn{3}{|l|}{ Adjustments for noncash effects: } \\ \hline \multicolumn{3}{|l|}{ 1) Depreciation expense } \\ \hline 2) Gain on sale of available-for-sale debt securities & 4,500 & \\ \hline 3) Gain on sale of equipment & & 40 \\ \hline \multicolumn{3}{|l|}{ Changes in operating assets and liabilities: } \\ \hline \multicolumn{3}{|l|}{ 1) } \\ \hline & & \\ \hline \\ \hline \multicolumn{3}{|l|}{ 4) } \\ \hline \\ \hline \multicolumn{3}{|l|}{ Net cash flows from operating activities } \\ \hline & & \\ \hline \multicolumn{3}{|l|}{ Cash flows from investing activities: } \\ \hline \multicolumn{3}{|l|}{ 1) } \\ \hline \multicolumn{3}{|l|}{ 2) } \\ \hline \multicolumn{3}{|l|}{ 3) } \\ \hline \multicolumn{3}{|l|}{ Net cash flows from investing activities } \\ \hline & & \\ \hline \multicolumn{3}{|l|}{ Cash flows from financing activities: } \\ \hline \\ \hline \multicolumn{3}{|l|}{ 2) } \\ \hline \multicolumn{3}{|l|}{ 3) } \\ \hline \multicolumn{3}{|l|}{ Net cash flows from financing activities } \\ \hline \multicolumn{3}{|l|}{ Net increase in cash } \\ \hline \multicolumn{3}{|l|}{ Cash balance, January 1} \\ \hline Cash balance, December 31 & & \\ \hline \end{tabular} SCF Comparative BS

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