Partial Statement of Cash Flows}

Service Company had net income during the current year of \(\$ 115,500\). The following information was obtained from Service's statement of financial position:

\section*{Additional Information:}
1. Equipment with accumulated depreciation of \(\$ 15,000\) was sold during the year.
2. Cash dividends of \(\$ 36,000\) were paid during the year.
\section*{Required:}
1. Prepare the net cash flows from operating activities using the indirect method.
2. CONCEPTUAL CONNECTION How would the cash proceeds from the sale of equipment be reported on the statement of cash flows?

3. CONCEPTUAL CONNECTION How would the cash dividends typically be reported on the statement of cash flows?
YOUDECIDE OBJECTIVE 7 4. What could the difference between net income and cash flow from operating activities signal to financial statement users?
\section*{Exercise

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Accounts receivable Inventory Accounts payable $22,300 increase 28,700 increase 14,240 decrease Interest payable 3.180 increase Accumulated depreciation (equipment) 27,800 increase Accumulated depreciation (building) 12,340 increase