Ashley Limited, which follows ASPE, had the following information available at the end of 2011:

Instructions
(a) Prepare a statement of cash flows for Ashley Limited using the direct method, accompanied by all required disclosures and a schedule that reconciles net income to cash flow from operations.
(b) Does Ashley Limited have any options available for the classification of interest and dividends paid or received?
(c) Prepare a memo for top management that summarizes and comments on the cash activities of Ashley in 2011.
(d) Management wants to provide more captions (headings) in the section for cash flow from operating activities.
Recommend one additional caption that would help achieve this goal.

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ASHLEY LIMITED Comparative Balance Sheet December 31, 2011, and 2010 2011 2010 Cash Accounts receivable Temporary investments (FV-NI) Inventory Prepaid rent Prepaid insurance Office supplies Land Building Accumulated depreciation Equipment Accumulated depreciation Patent Accumulated amortization $15,000 17,500 20,000 42,000 3,000 2,100 1,000 125,000 350,000 (105,000) 525,000 (130,000) 90,000 (45,000) $910.600 0 16,950 30,000 35,000 12,000 900 750 175,000 350,000 (87,500) 400,000 (112,000) 90,000 (40,000) $871,100 Total assets Temporary bank overdraft Accounts payable Income taxes payable Wages payable Short-term notes payable (trade) Long-term notes payable (non-trade) Future income tax liability Bonds payable Common shares Retained earnings 22,000 5,000 5,000 10,000 60,000 30,000 375,000 260,000 143,600 $910,600 $ 12,000 20,000 4,000 3,000 10,000 70,000 25,000 375,000 237,500 114,600 $871,100 Total liabilities and shareholders' equity ASHLEY LIMITED Income Statement Year Ended December 31, 2011 Sales revenuue Cost of goods sold Gross margin Operating expenses $1,160,000 (748,000) 412,000 Selling expenses Administrative expenses Salaries and wages expense Depreciation and amortization expense Total operating expenses $ 19,200 124,700 92,000 40,500 (276,400) 135,600 Income from operations Other revenueslexpenses Gain on sale of land Investment income note 1) Interest expense 8,000 6,400 (51,750) Income before taxes Income tax expense Net income (37,350) 98,250 (39,400) 事 58,850