Umlauf’s comparative balance sheets, income statement, and additional information follow.

Additional Information

a. Equipment costing $21,375 with accumulated depreciation of $11,100 is sold for cash.

b. Equipment purchases are for cash.

c. Accumulated Depreciation is affected by depreciation expense and the sale of equipment.

d. The balance of Retained Earnings is affected by dividend declarations and net income.

e. All sales are made on credit.

f. All merchandise inventory purchases are on credit.
g. Accounts Payable balances result from merchandise inventory purchases.
h. Prepaid expenses relate to “other operating expenses.”
Required 1. Prepare a statement of cash flows using the indirect method for year 2013.
2. Prepare a statement of cash flows using the direct method for year 2013.

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UMLAUF COMPANY Balance Sheets December 31, 2013 and 2012 2013 2012 Assets Cash $ 43,050 $ 23,925 Accounts receivable 34,125 39,825 Merchandise inventory. 156,000 146,475 Prepaid expenses 3,600 1,650 UMLAUF COMPANY Income Statement For Year Ended December 31, 2013 Equipment... 135,825 146,700 Sales.... $446,100 Accurn. depreciation-Equipment (61,950) (47.550) Cost of goods sold $222,300 Total assets $310,650 $311,025 Other operating expenses 120,300 Liabilities and Equity Depreciation expense. 25,500 (368,100) Accounts payable .... $ 28,800 $ 33,750 78,000 Income taxes payable 5,100 4,425 Other gains (losses) Dividends payable 0 4,500 Loss on sale of equipment.... 3,300 Bonds payable 0 37,500 Loss on retirement of bonds.. 825 Common stock, $10 par. 168,750 168,750 Income before taxes (4,125) 73,875 Retained earnings 108,000 62,100 Income taxes expense (13,725) Total liabilities and equity $310,650 $311,025 Net income. $ 60,150