12/31/11 12/31/10

Cash $204,000 $96,000

Acc. Receivable 180,000 108,000

Merchandise Entry 192,000 240,000

Property, plant, equipment $304,000 $480,000

Less accumulated Depreciation (160,000) 144,000 (152,000) 328,000

720,000 $772,000

Accounts Payable $88,000 $48,000

Income taxes Payable 176,000 196,000

Bonds Payable 180,000 300,000

Common Stock 108,000 108,000

Retained Earnings $720,000 $772,000

Income Statement

For the year Ended December 31, 2011

Sales $4,200,000

Cost of Sales3,576,000

Gross Profit624,000

Selling Expenses $300,000

Administrative expenses96,000396,000

Income from Operations228,000

Interest Expense36,000

Income before taxes192,000

Income taxes48,000

Net Income$144,000

Dividends for the year 20111 were $96,000.

During the year, equipment was sold for $120,000. This equipment cost $176,000 originally and hada book value of $144,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales.

All depreciation expense is in the selling expense category.

Direct Method

The net cash provided (used) by financing activities is

a. $(120,000)

b. 24,000

c. $(216,000)

d. $96,000