Additional Information In Year 1, Krate sold machinery bought at $36, for $18, resulting in a $2 gain on income statement. $810 in dividends were paid in Year 1. SG&A expense includes $50 of interest expense, and amortization expense of $30. Cost of good sold includes depreciation of $260. Income tax expense includes deferred tax liability of $20

(Show and number ALL the working with required format). No marks will given for stating the answers and not following the instructions even if the answers are correct.

a. b. c.

Prepare Cash Flows from Operations using the Direct method Prepare Statement of Cash Flows from Operations using the Indirect method

Complete the cash flow and comment on the financial health of the firm.

1. Below are the balance sheet and income statement for Krate Corporation. Year 0 Year 1 Balance Sheet Assets Cash Receivables Inventories Total current assets Fised assets Accumulated depreciation Investment in affiliate Goodwill Total assets $ 240 360 750 1.350 4.500 (1.500) 1.000 1.010 $6.360 S 120 450 1.053 1.623 6.438 (1.740) 1.050 980 $8.351 Liabilities and Equity Accounts payable Bonds payable S 360 300 S590 700 Deferred income taxes Capital stock Additional paid-in capital Retained earnings Total liabilities and equity 240 2.400 200 2160 S6360 260 3.200 1.300 2301 $8.351 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 Year 1 $19.950 11.101 8.8.19 7000 1.819 SO $ 1.871 920 S951 Additional Information In Year 1, Krate sold machinery bought at $36, for $18, resulting in a $2 gain on income statemen $810 in dividends were paid in Year 1. SG&A expense includes $50 of interest expense, and amortization expense of $30. Cost of good sold includes depreciation of $260. Income tax expense includes deferred tax liability of $20