The 19X5 comparative balance sheet and income statement of Loco Taco Corp. follow on page 769 .

Loco Taco had no noncash investing and financing transactions during 19X5. During the year there were no sales of land or equipment, no issuances of notes payable, no retirements of stock, and no treasury stock transactions.

\section*{Required}

1. Prepare the \(19 \mathrm{X} 5\) statement of cash flows, formating operating activities by the direct method.

2. How will what you learned in this problem help you evaluate an investment?

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COMPARATIVE BALANCE SHEET 19X5 19X4 Increase (Decrease) Current assets: Cash and cash equivalents. 7,200 $ 5,300 $ 1,900 Accounts receivable. 28,600 26,900 1,700 Interest receivable.. 1,900 700 1,200 Inventories. 83,600 87,200 (3,600) Prepaid expenses.. Plant assets: Land.. Equipment, net. Total assets. Current liabilities: Accounts payable. Interest payable..... Salary payable. Other accrued liabilities. Income tax payable. Long-term liabilities: 2,500 1,900 600 89,000 60,000 29,000 53,500 49,400 4,100 $266,300 $231,400 $34,900 $ 31,400 $ 28,800 $ 2,600 4,400 4,900 (500) 3,100 6,600 (3,500) 13,700 16,000 (2,300) 8,900 7,700 1,200 Notes payable. 75,000 100,000 (25,000) Stockholders' equity: Common stock, no-par 88,300 64,700 23,600 Retained earnings........ 41,500 2,700 38,800 Total liabilities and stockholders' equity. $266,300 $231,400 $34,900