Refer to the data in QS 12-7.

Use the direct method to prepare the operating activities section of Cruz’s statement of cash flows.

QS 12-7.

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CRUZ, INC. Comparative Balance Sheets At December 31 2020 2019 Assets $ 94,800 $ 24,000 Cash Accounts receivable, net 41,000 51,000 Inventory...... 85,800 95,800 Prepaid expenses. 5,400 4,200 Total current assets 227,000 175,000 Furniture .... 109,000 119,000 ..... Accum. depreciation-Furniture (17,000) (9,000) Total assets... $319,000 $285,000 CRUZ, INC. Income Statement Liabilitles and Equity Accounts payable... Wages payable.. Income taxes payable.. For Year Ended December 31, 2020 $ 15,000 $ 21,000 9,000 5,000 Sales .... $488,000 1,400 2,600 Cost of goods sold. 314,000 25,400 28,600 Total current liabilities Gross profit.. 174,000 Notes payable (long-term) 29,000 69,000 Operating expenses (excluding depreciation) Total liabilities... 54,400 97,600 89,100 Depreciation expense 37,600 Equity Common stock, $5 par value..... Retained earnings..... Total liabilities and equity.. Income before taxes. 47,300 229,000 179,000 Income taxes expense 17,300 35,600 8,400 Net income $ 30,000 $319,000 $285,000