1. Refer to the information about Clarion Corporation above to prepare a working paper for a statement of cash flows according to the direct method.

2. Prepare a statement of cash flows that reports the cash inflows and outflows from operating activities according to the direct method. Also prepare a schedule of non cash investing and financing activities.

For the ASSET section of the Spreadsheet, please remember that when you input figures into the middle two columns of the Spreadsheet, you should take the number in the first column (year A or 2002), add the number in the Debit column, and then subtract the number in the Credit column. The result should equal the number in the fourth column (year B or 2003).

For the LIABILITIY AND EQUITY section of the Spreadsheet, please keep in mind that when you enter figures into the middle two columns, you should take the number in the first column (year A or 2002), subtract the number in the Debit column, and then add the number in the Credit column. The result should equal the number in the fourth column (year B or 2003).

When inserting numbers into the middle two columns, think of it as if you were recording a journal entry with a debit and a credit. Perform the same actions in the middle two columns as you would for a journal entry: debit what you would debit in an entry and credit what you would credit in an entry.

Clarion Corporation's 2003 and 2002 balance sheets included the following items. Problem 17-5 Statement of cash flows (direct method) (LO 1, 2, 3) Working Paper for Statement of Cash Flows Direct Method For the Year Ended December 31, Year B