Sampson Company’s balance sheet for December 31, 2002, as well as the income statement for the year ended December 31, 2002, are on the following page.

Required

a. Prepare the statement of cash flows for the year ended December 31, 2002, using the indirect method for net cash flow from operating activities.

b. Prepare the statement of cash flows for the year ended December 31, 2002, using the direct method for net cash flow from operating activities.

c. Comment on significant items disclosed in the statement of cash flows.

SAMPSON COMPANY Balance Sheet December 31, 2002 and 2001 2002 2001 Assets Cash $ 38,000 $ 60,000 Net receivables 72,000 65,000 Inventory 98,000 85,000 Plant assets 195,000 180,000 Accumulated depreciation (45,000) (35,000)
Total assets $358,000 $355,000 Liabilities and Stockholders’ Equity Accounts payable $ 85,000 $ 80,000 Accrued liabilities (related to cost of sales) 44,000 61,000 Mortgage payable 11,000 —
Common stock 180,000 174,000 Retained earnings 38,000 40,000 Total liabilities and stockholders’ equity $358,000 $355,000 SAMPSON COMPANY Income Statement For Year Ended December 31, 2002 Net sales $145,000 Cost of sales 108,000 Gross profit 37,000 Other expenses 6,000 Profit before taxes 31,000 Tax expense 12,000 Net income $ 19,000 Other data:
1. Dividends paid in cash during 2002 were $21,000.
2. Depreciation is included in the cost of sales.
3. The change in the accumulated depreciation account is the depreciation expense for the year.