Refer to the data in QS 12-6.

Use the direct method to prepare the cash provided (used) from operating activities section only of the statement of cash flows.

CRUZ, INC.
Comparative Balance Sheets December 31, 2008 2008 2007 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,800 $ 24,000 Accounts receivable, net . . . . . . . . . . . . . 41,000 51,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 85,800 95,800 Prepaid expenses . . . . . . . . . . . . . . . . . . 5,400 4,200 Furniture . . . . . . . . . . . . . . . . . . . . . . . . 109,000 119,000 Accum. depreciation—Furniture . . . . . . . (17,000) (9,000)
Total assets . . . . . . . . . . . . . . . . . . . . . . $319,000 $285,000 Liabilities and Equity Accounts payable . . . . . . . . . . . . . . . . . . $ 15,000 $ 21,000 Wages payable . . . . . . . . . . . . . . . . . . . . 9,000 5,000 Income taxes payable . . . . . . . . . . . . . . . 1,400 2,600 Notes payable (long-term) . . . . . . . . . . . . 29,000 69,000 Common stock, $5 par value . . . . . . . . . . 229,000 179,000 Retained earnings . . . . . . . . . . . . . . . . . . 35,600 8,400 Total liabilities and equity . . . . . . . . . . . . $319,000 $285,000 CRUZ, INC.
Income Statement For Year Ended December 31, 2008 Sales . . . . . . . . . . . . . . . . . . . . . . $488,000 Cost of goods sold . . . . . . . . . . . 314,000 Gross profit . . . . . . . . . . . . . . . . 174,000 Operating expenses Depreciation expense . . . . . . . $37,600 Other expenses . . . . . . . . . . . . 89,100 126,700 Income before taxes . . . . . . . . . . 47,300 Income taxes expense . . . . . . . . . 17,300 Net income . . . . . . . . . . . . . . . . $ 30,000.AppendixLO1