Refer to the information for Stonewall Company in AP5€“2.

Required:
1. Prepare a statement of cash flows for the year ended December 31, 2015. Use the direct method to compute the cash flows from operating activities. Include any additional required note disclosures.
2. Is the direct method of reporting cash flows from operating activities easier to prepare than the indirect method? Explain.
3. Is the direct method of reporting cash flows from operating activities easier to understand than the indirect method? Explain.

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Statement of Earnings Sales revenue Cost of sales Depreciation expense Other expenses Net eamings $ 80,000 (35,000) (4,000) (32,000) $ 9,000 Statement of Financial Position Cash Trade receivables Merchandise inventory Machinery inet) $ 48.000 18,000 15,000 Total assets Trade payables Accrued liabilities Dividends payable Note payable, short term Contributed capital Retained camings $106,000 $ 10,000 21,000 2000 15,000 54,000 Total liabilites and shareholders' equity $106,000