E11-31B. (Learning Objectives 3, 4, 5, 7: Preparing and analyzing the statement of cash flows—

indirect method) The Income Statement and additional data of Norton Travel Products, Inc., follow:

Additional data:

a. Acquisition of PPE was €180,000. Of this amount, €145,000 was paid in cash and

€35,000 by signing a note payable.

b. Proceeds from sale of land totaled €49,000.

c. Proceeds from issuance of shares totaled €34,000.

d. Payment of long-term note payable was €16,000.

e. Payment of dividends was €9,000.

f. From the Balance Sheets:

Requirements 1. Prepare Norton’s statement of cash flows for the year ended December 31, 20X6, using the indirect method.

2. Evaluate Norton’s cash flows for the year, including its free cash flow and cash realization ratio. In your evaluation, review all three categories of cash flows and give the reason for your evaluation.

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