The following items include the 1990 and 1989 balance sheets and the 1990 income statement of the James Company. Additional information about the company's 1990 transactions is presented after the financial statements.

Additional information:
1. Received \(\$ 5,000\) from the sale of Icahn Corporation common stock that originally cost \(\$ 2,000\).
2. Received a cash dividend of \(\$ 500\) from the Icahn Corporation.
3. Received \(\$ 400\) cash from the First National Bank on December 31, 1990, as interest income.
4. Sold old equipment for \(\$ 1,400\). The old equipment originally cost \(\$ 4,000\) and had accumulated depreciation of \(\$ 2,000\).
5. Purchased land costing \(\$ 5,000\) on December 31,1990 , in exchange for a note payable. Both principal and interest are due on June 30, 1991.
6. Purchased new equipment for \(\$ 9,000\) cash.
7. Purchased treasury stock for \(\$ 1,800\).
8. Paid off notes payable of \(\$ 3,500\).
9. Sold additional bonds payable at par of \(\$ 3,000\) on January 1, 1990 .
10. Issued 1,000 shares of common stock for cash at \(\$ 2\) per share.
11. Declared and paid a \(\$ 4,000\) cash dividend on October 1, 1990.
(The working papers that accompany the text include forms for this problem.)
\section*{Required}

a. Prepare a direct method working paper for James Company's 1990 statement of cash flows.

b. Prepare the statement of cash flows for 1990 .

c. Prepare a schedule that reconciles net income to the company's net cash provided (or used) by operating activities for 1990 .

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JAMES COMPANY Balance Sheet December 31, 1990, and 1989 1990 1989 Assets Current assets: Cash and cash equivalents $ 1,000 Accounts receivable 4,500 Merchandise inventory. 19,000 $ 800 3,100 16,000 Prepaid expenses. 700 600 Total current assets $25,200 $20,500 Long-term investments: Icahn Corporation common stock. Plant assets: 10,000 12,000 Land.. Buildings. 9,000 4,000 $60,000 $60,000 Less accumulated depreciation. Equipment.. Less accumulated depreciation. Total assets 38,000 22,000 36,000 24,000 $21,000 $16,000 6,000 15,000 4,000 12,000 $81,200 $72,500 Current liabilities: Notes payable Liabilities Accounts payable. Other accrued liabilities Interest payable Taxes payable. Total current liabilities Long-term liabilities: Bonds payable, due in 1998. Total liabilities $ 5,000 9,000 $ 3,500 10,000 5,300 4,200 400 300 300 500 $20,000 $18,500 25,000 22,000 $45,000 $40,500