(Appendix 11A) Preparing a Statement of Cash Flows-Direct Method Financial statements for Rowe Publishing Company are presented below.

\section*{Required:}
Prepare a statement of cash flows for 2018 , using the direct method to determine net cash flow from operating activities.

\section*{Exercise

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ASSETS Current assets: Rowe Publishing Company Statements of Financial Position December 31, 2018 and 2017 2018 2017 Cash Accounts receivable $ 85,000 240,000 $ 66,000 231,000 Inventory 190,000 170,000 Total current assets 515,000 467,000 Property, plant, and equipment Building $ 400,000 Equipment 155,000 555,000 $ 400,000 130,000 $30,000 Accumulated depreciation (375,000) (350,000) Net property, plant, and equipment Total assets 180,000 $695.000 180,000 $647,000 LIABILITIES AND EQUITY Rowe Publishing Company Statement of Earings for the Year Fnded December 31, 2018 Sales $1,051,000 Less: Cost of goods sold (578,000) Gross margin 473.000 Less operating expenses: Salanes Depreciation Income from operations Less: Interest expense Income before tax Less: Income tax expense Net income $(351,000) (25,000) (376,000) 97,000 (16,000) 81,000. (22,000) $ 59,000 $149,000 Additional Information: 1. No buildings nor equipment were sold during 2018. Equipment was purchased for $25,000 cash, 2. Notes payable in the amount of $35,000 were repaid dur- ing 2018. 3. Bonds payable of $50,000 were issued for cash during 2018. 4. Rowe Publishing declared and paid dividends of $35,000 during 2018. Current liabilities: Accounts payable $133.000 Salaries payable 15,000 Income tax payable 10,000 $121,000 11,000 17,000 Total current liabilities $158,000 Long-term liabilities: Notes payable 115,000 150,000 Bords payable 50.000 Total long-term liabilities Total liabilities 165,000 323,000 150,000 299,000 Equity: Common shares Retained earnings 300,000 72,000 300,000 18,000 Total equity Total liabilities and equity 372,000 $695,000 348,000 $647,000