(Learning Objective 4, 5, 6, 7: Preparing and analyzing the statement of cash fl ows—direct method) The income statement and additional data of Cobbs Hill, Inc., follow:

■ writing assignment Additional data:

a. Collections from customers are $13,000 more than sales.

b. Payments to suppliers are $1,300 less than the sum of cost of goods sold plus advertising expense.

c. Payments to employees are $2,000 more than salary expense.

d. Dividend income, interest expense, and income tax expense equal their cash amounts.

e. Acquisition of PPE is $143,000. Of this amount, $100,000 is paid in cash and $43,000 by signing a note payable.

f. Proceeds from sale of land total $28,000.

g. Proceeds from issuance of shares total $93,000.

h. Payment of long-term note payable is $17,000.

i. Payment of dividends is $8,500.

j. Cash balance, April 30, 20X5, was $21,000.

❙ Requirements 1. Prepare Cobbs Hill, Inc.’s statement of cash fl ows and accompanying schedule of non-cash investing and fi nancing activities. Report operating activities by the direct method.

2. Evaluate Cobbs Hill’s cash fl ows for the year, including its free cash fl ow and cash realization ratio. In your evaluation, review all three categories of cash fl ows and give the reason for your evaluation.