The following income statement and selected balance sheet account data are available for Treece, Inc., at December 31, 2015:

Additional Information

1. Dividend revenue is recognized on the cash basis. All other income statement amounts are recognized on the accrual basis.

2. Operating expenses include depreciation expense of $115,000.

Instructions
a. Prepare a partial statement of cash flows, including only the operating activities section of the statement and using the direct method. Place brackets around numbers representing cash payments. Show supporting computations for the following:

1. Cash received from customers.

2. Interest and dividends received.

3. Cash paid to suppliers and employees.

4. Interest paid.

5. Income taxes paid.

b. Management of Treece, Inc., is exploring ways to increase the cash flows from operations. One way that cash flows could be increased is through more aggressive collection of receivables. Assuming that management has already taken all the steps possible to increase revenue and reduce expenses, describe two other ways that cash flows from operations could be increased.

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TREECE, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2015 Revenue: $2,850,000 104,000 Net sales Dividend income 70,000 Interest income Gain on sales of marketable securities 4,000 Total revenue and gains $3,028,000 Costs and expenses: $1,550,000 Cost of goods sold Operating expenses 980,000 Interest expense 185,000 Income tax expense 90,000 Total costs and expenses 2,805,000 $ 223,000 Net income Beginning of Year End of Year Selected account balances: $ 650,000 $ 720,000 Accounts receivable Accrued interest receivable 9,000 6,000 Inventories ... 800,000 765,000 Short-term prepayments 20,000 15,000 Accounts payable (merchandise suppliers) Accrued operating expenses payable Accrued interest payable . 570,000 562,000 65,000 94,000 21,000 12,000 Accrued income taxes payable 22,000 35,000