Above are the balance sheet and income statement for Anderson Corporation.

This problem is a picture so I cannot change it but a small change needs to be made to the Income Statement. On the 4^th last line, the Gain on Sale of $2 is not entered. This increases the Income before Taxes to $1,871. With Income Taxes remaining at $920, this gives a bottom line of Net Income = $951. You need to use the figures given in this note in working this problem, not the figures given in the Income Statement.

Additional Information 1. In Year 1, Anderson sold machinery bought at $36, for $18, resulting in a $2 gain on the income statement. 2. SG&A expense includes $50 of interest expense, and amortization expense of $30. 3. Cost of goods sold includes depreciation of $260. 4. Income tax expense includes deferred tax liability of $20. a. Prepare the Cash Flows from Operations section using the Direct Method. b. Prepare a Statement of Cash Flows using the Indirect Method.

Change Balance Sheet Assets Cash Receivables Inventories Year 0 ear 1 Total current assets Fixed assets Accumulated depreciation Investment in affiliate Goodwill Total assets $ 240 360 750 1,350 4,500 (1,500) 1,000 1,010 $6.360 120 450 1,053 1,623 6,438 (1,740) 1,050 $ (120) 90 303 273 1,938 (240) 50 980_(30 991 $8.351 Liabilities and Equity Accounts payable Bonds payable $ 360 300 $ 590 700 $ 230 400 Deferred income taxes Capital stock Additional paid-in capital Retained earnings Total liabilities and equitv 240 2,400 900 2,160 $6.360 260 3,200 1,300 2,301 8.351 20 800 400 141 $1.991 Year 1 Income Statement Sales Cost of goods sold Gross profit SG&A Operating income Equity in earnings of affiliate (no dividends received) Gain on sale of fixed assets Income before taxes Income taxes Net income $19,950 11,101 8,849 7,030 1,819 50 $ 1,869 920 49