1.

A Corporation reported net income of $20,000 for 2015. The income statement revealed

Sales of $200,000;

Gross profit of $104,000;

Selling and administrative costs of $68,000;

Interest expense of $4,000;

Income taxes of $12,000

The selling and administrative expenses included $5,000 for depreciation.

No equipment was sold during the year. Equipment purchases were made with cash. Prepaid insurance included in the balance sheet related to administrative costs.

All accounts payable included in the balance sheet relate to inventory purchases.

The change in retained earnings is attributable to net income and dividends.

The increase in common stock and additional paid-in capital is due to issuing additional shares for cash.

Comparative Balance Sheets for a Company follow.

TASKS

1. Using the indirect method, prepare a Statement of Cash Flows

2. Prepare Net Cash Flows only from Operating Activities under the Direct method

Comparative Balance Sheets for a Company follow. 2015 2014 $ $ T Assets Current Assets Cash Accounts receivable (net) Inventory Prepaid Insurance Total Current Assets Land Building and Equipment Less Accumulated Depreciation Total Plant Assets 91,740 39,850 49,720 2,600 183,910 50,000 300,000 (41,000) 309,000 94,290 34,300 55,760 2,200 186,550 50,000 260,000 (36,000) 274,000 Total Assets 492,910 460,550 Liabilities Current Liabilities Accounts Payable Interest Payable Income Taxes Payable Total Current Liabilities 17,140 2,100 4,400 23,640 18,680 3,000 1,600 23,280 Stockholders' Equity Common Stock Paid-in Capital in Excess of Par Retained Earnings Total Stockholders' Equity Total Liabilities and SHE 142,000 198,000 129,270 469,270 492,910 140,000 180,000 117.270 437,270 460,550