P11-77B. (Learning Objectives 3, 4, 5, 6: Preparing the statement of cash flows—indirect and direct methods) The comparative Balance Sheets of Salim Design Studio, Inc., at June 30, 20X6 and 20X5, and transaction data for fiscal year 20X6 are as follows:

.

Transaction data for the year ended June 30, 20X6:

a. Net income, €73,500

b. Depreciation expense on equipment, €14,000

c. Purchased long-term investment, €5,000

d. Sold land for €33,700, including €7,000 loss

e. Acquired equipment by issuing long-term note payable, €15,300

f. Paid long-term note payable, €60,800 g. Received cash for issuance of shares, €21,200 h. Paid cash dividends, €47,900 i. Paid short-term note payable by issuing shares, €7,000 Requirements 1. Prepare the statement of cash flows of Salim Design Studio, Inc., for the year ended June 30, 20X6, using the indirect method to report operating activities. Also prepare the accompanying schedule of noncash investing and financing activities. All current accounts except short-term notes payable result from operating transactions.
2. Prepare a supplementary schedule showing cash flows from operations by the direct method. The accounting records provide the following: collections from customers, €272,700; interest received, €1,400; payments to suppliers, €130,900; payments to employees, €40,000; payments for income tax, €12,600; and payment of interest, €5,300.

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A1 Salim Design Studio Comparative Balance Sheets B 4 Current assets: Cash Accounts receivable Inventories Prepaid expenses 9 Long-term investment 10 Equipment, net 11 Land 12345678QUINOTORI~~~~~~~ 13 Current liabilities: Notes payable, short-term Accounts payable Income tax payable Accrued liabilities Interest payable 19 Salary payable 20 Long-term note payable 21 Share capital 22 Retained earnings June 30 Increase 20X6 20X5 (Decrease) 28,900 2,400 26,500 59,000 22,300 36,700 98,200 40,400 57,800 3,500 2,500 1,000 10,000 5,000 5,000 74,900 73,600 1,300 58,100 98,900 (40,800) 332,600 245,100 87,500 13,200 20,200 (7,000) 42,300 41,300 1,000 13,300 14,400 (1,100) 97,400 9,300 88,100 3,500 2,500 1,000 400 3,100 (2,700) 48,700 94,200 (45,500) 79,700 51,600 28,100 34,100 8,500 25,600 332,600 245.100 87.500