17.14 **Problem 14**The operations of The McKenzie, a small lodging operation, are becoming more complex. Ms. Jo McKenzie, the owner, has asked for your help in preparing her statement of cash flows. She is able to present you with condensed balance sheets and some additional information.**The McKenzie Condensed Balance Sheets** *December 31, 20X3 and 20X4*| | 20X3 | 20X4 ||------------------|------------|-----------|| **Cash** | $ 10,000 | $ 6,000 || **Accounts Receivable**| 26,500 | 25,500 || **Investments** | - | 50,000 || **Equipment** | 200,000 | 325,000 || **Accumulated Depreciation**| (20,000) | (40,000) || **Total Assets** | $226,500 | $321,500 |**Current Liabilities:**- **Accounts Payable:** $18,000 (20X3), $21,000 (20X4)- **Mortgage Payable (Current):** $5,000 (20X3 and 20X4)- **Dividends Payable:** $1,500 (20X3 and 20X4)**Noncurrent Liabilities:**- **Mortgage Payable:** $75,000 (20X3), $70,000 (20X4)- **Notes Payable:** $0 (20X3), $40,000 (20X4)This section presents financial data showing the changes in assets and liabilities for The McKenzie between the years 20X3 and 20X4. ### Statement of Cash Flows and Additional Information for 20X4#### Balance Sheet Overview- **Common Stock**: $50,000 to $100,000- **Retained Earnings**: $73,500 to $80,500- **Total Liabilities and Owners' Equity**: - Start: $226,500 - End: $321,500#### Additional Information for 20X4:1. **Equipment**: Cost $20,000, depreciated to salvage value of $2,000, sold for $8,000.2. **Common Stock**: Purchased as a long-term investment for $5,000, sold for $15,000.3. **Dividends**: Declared totaled $15,000.4. **Equipment**: Purchased for $145,000.5. **Depreciation Expense**: Totaled $38,000.6. **Long-term Debt**: $5,000 reclassified as current, $5,000 of long-term debt paid.7. **Common Stock**: $50,000 sold, $40,000 long-term debt (note payable) borrowed.8. **Net Income**: Generated by the McKenzie, totaling $22,000.### Instructions:- **Do not build the Statement of Cash Flows (SCF)**, only list which area each item relates to.- Consider balance sheet accounts and additional information.- Note: Not all items go to SCF, refer to the next page for the sample format.#### SCF Item Categorization| Item | Area of SCF ||------------------------|------------------------------------------------------|| cash | Cash-beginning of the period & end of the period || A/R | Cash flows from operating activities || ... | ... || ... | ... || ... | ... || AI 1: sale of equipment| || AI 2: sale of investment| || AI 3: | || AI 4: ... | || AI 5: ... | |This table classifies where each financial activity falls within the Statement of Cash Flows categories. Additional specific items and their categories need to be determined based on details from subsequent information or analysis references.

The ending balances in a company's asset, liability, and equity accounts as of the date specified on…

Problem 14 The operations of The McKenzie, a small lodging operation, are becoming more complex. Ms. Jo McKenzie, the owner, has asked for your help in preparing her statement of cash flows. She is able to present you with condensed balance sheets and some additional information. The McKenzie Condensed Balance Sheets December 31, 20X3 and 20X4 20X3 20X4 Cash Accounts Receivable Investments Equipment Accumulated Depreciation Total Assets $ 10,000 26,500 $ 6,000 T 25,500 10,000 200,000 (20,000) $226,500 5,000 325,000 (40,000) $321,500 0.00 Current Liabilities: Accounts Payable Mortgage Payable (Current) Dividends Payable Noncurrent Liabilities: $ 18,000 5,000 5,000 $ 21,000 5,000 5,000 Mortgage Payable Notes Payable 75,000 -0- 70,000 40,000