(Learning Objectives 2, 4, 5, 6: Preparing the statement of cash fl ows—direct method) Dunleavy Furniture Gallery, Inc., provided the following data from the company’s records for the year ended December 31, 20X6:

a. Credit sales, €567,000

b. Loan to another company, €12,800

c. Cash payments to purchase PPE, €59,900

d. Cost of goods sold, €382,700

e. Proceeds from issuance of ordinary shares, €7,000

f. Payment of cash dividends, €48,000 g. Collection of interest, €4,200 h. Acquisition of equipment by issuing short-term note payable, €16,500 i. Payments of salaries, €93,700 j. Proceeds from sale of PPE, €22,300, including €7,000 loss k. Collections on accounts receivable, €406,000 l. Interest revenue, €3,300 m. Cash receipt of dividend income, €4,000 n. Payments to suppliers, €387,200 o. Cash sales, €201,000 p. Depreciation expense, €40,100 q. Proceeds from issuance of note payable, €19,300 r. Payments of long-term notes payable, €69,000 s. Interest expense and payments, €13,700 t. Salary expense, €91,600 u. Loan collections, €12,100 v. Proceeds from sale of investments, €11,200, including €3,800 gain w. Payment of short-term note payable by issuing long-term note payable, €68,000 x. Amortization expenses, €3,200 y. Income tax expense and payments, €36,800 z. Cash balance: December 31, 20X5, €40,000; December 31, 20X6, €6,000

❙ Requirements 1. Prepare Dunleavy Furniture Gallery, Inc.’s statement of cash fl ows for the year ended December 31, 20X6. Use the direct method for cash fl ows from operating activities.

Include an accompanying schedule of non-cash investing and fi nancing activities.

2. Evaluate 20X6 from a cash-fl ow standpoint. Give your reasons.