1. Using the information from Problem 16-4A, prepare a statement of cash flows for Rucker Photography Products Inc. using the direct method of presenting cash flows from operating activities.

2. How does Rucker's cash flow compare to its net income? Summarize the changes that caused the difference.

In Problem 16-4A

The statement of financial position of Rucker Photography Products Inc. for December 31, 2016 and 2015 is as follows:

The statement of income for the year ended December 31, 2016, is as follows:

The following additional information was taken from the records:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $88,000 cash.
d. The common shares were issued for cash.
e. There was a $10,000 debit to Retained Earnings for cash dividends declared.
f. The income taxes expense was paid in cash.

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Dec. 31, 2016 Dec. 31, 2015 Assets $ 321,700 $ 339,700 Cash. Accounts receivable (net) Inventories. 283,400 273,700 505,500 491,400 Investments.. 120.000 Equipment... Accumulated depreciation. 440,000 340,000 (122,200) 260,000 (100, 200) Land.. $1,688,400 $1,464,600 Liabilities and Shareholders' Equity Accounts payable (merchandise creditors)... Accrued expenses payable (operating expenses) Dividends payable. Common shares Retained earnings. %24 374.200 385.900 31,700 35,400 4.400 3.200 112.000 228,000 1,038,400 939,800 $1,688,400 $1,464,600 Sales Cost of goods sold $2,990.000 1,226,000 Gross profit .. Operating expenses: Depreciation expense Other operating expenses. 1.764.000 2$ 22.000 1,550.000 Total operating expenses. 1.572.000 Operating income . Other expense: Loss on sale of investments. 192.000 (32.000) Income before income taxes 160,000 Income taxes expense 51,400 Net income . $ 108,600