(SCF—Direct Method) Mardi Gras Company has not yet prepared a formal statement of cash flows for the 2008 fiscal year. Comparative balance sheets as of December 31, 2007 and 2008, and a statement of income and retained earnings for the year ended December 31, 2008, are presented below.

Instructions Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and cost of goods sold. Do not prepare a reconciliation schedule.

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Sales MARDI GRAS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2008 ($000 OMITTED) $3,800 Expenses Cost of goods sold Salaries and benefits $1,200 725 Heat, light, and power Depreciation 75 80 Property taxes 19 Patent amortization 25 Miscellaneous expenses 10 Interest 30 2,164