Data for Arma Ltd. Are presented in PA. Further analysis reveals that accounts payable pertain to merchandise creditors.

Instructions
Prepare a statement of cash flows for Arma Ltd. Using the directmethod.

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ARMA LTD Comparative Statements of Financial Position December 31 Assets Plant assets Accumulated depreciation Investments Prepaid expenses Inventories Accounts receivable Cash 2011 270,000 (50.000) 138.000 28.400 112.500 92.800 90.800 2010 $242.500 (52.000) 1 14.000 26.000 02.850 33.000 48.400 $514.750 Total $682.500 Equity and Liabilities Share capitalordinary Retained carnings Bonds payable Accounts payable Accrued expenses payable 220.000 224.000 10.000 2.000 16.500 682.500 $175.000 105.450 150.000 67.300 17.000 $514.750 Total ARMA LTD. Income Statement For the Year Ended December 31, 2011 392.780 Sales Less: Cost of goods sold Operating expenses. excluding S135.460 depreciation Depreciation expense Income taxes Interest expense Loss on sale of plant assets 2.410 46.500 27.280 4.730 7.500 233.880 $158,900 Net income