AMERICAN MODEM Income Statement For the Year Ended December 31, 19_ $9,500,000 320,000 70,000 $9,890,000 Revenue: Net sales Interest income.... Gain on sales of marketable securities Total revenue and gains Costs and expenses: Cost of goods sold... Operating expenses (including depreciation of $700,000) Interest expense.... Income taxes... Loss on sales of plant assets. Total costs, expenses, and losses. Net income.... $4,860,000 3,740,000 270,000 300,000 90,000 9,260,000 $ 630,000 Information about changes in the company's balance sheet accounts over the year is summarized below: 1 Accounts receivable decreased by $85,000. 2 Accrued interest receivable increased by $15,000. 3 Inventory decreased by $280,000, and accounts payable to suppliers of mer- chandise decreased by $240,000. 4 Short-term prepayments of operating expenses decreased by $18,000, and ac- crued liabilities for operating expenses increased by $35,000. 5 The liability for accrued interest payable decreased by $16,000 during the year. 6 The liability for accrued income taxes payable increased by $25,000 during the year. 7 The following schedule suminarizes the total debit and credit entries during the year in other balance sheet accounts: Debit Credit Entries Entries Marketable securities ..... $ 120,000 $ 210,000 Notos receivable (cash loans made to others) 250,000 190,000 Plant assets (see paragraph 3).... 3,000,000 360,000 Notes payablo (short-term borrowing) 620,000 740,000 Bonds payable ..... 1,100,000 Capital stock... 50,000 Additional pald-in capital (from issuance of stock) 840,000 Retained earnings (see paragraph 9 below) 320,000 630,000 8 The $360,000 in credit entries to the plant asset accounts are net of any debits to accumulated depreciation when plant assets were retired. Thus, the $360,000 in credit entries represents the book value of all plant assets sold or retired during the year. 9 The $320,000 debit to retained earnings represents dividends declared and paid during the year. The $630,000 credit entry represents the net income shown in the income statement. 10-All investing and financing activities were cash transactions. 11 Cash and cash equivalents amounted to $448,000 at the beginning of the year, and to $330,000 at year-end. STRUCTIONS You are to prepare a statement of cash flows for the current year, following the format illustrated on page 878. Cash flow froin operating activities is to be deter- mined by the direct method. Place brackets around dollar amounts representing cash outlays. Show separately your computations of the following amounts: 1 Cash received from customers 2 Interest received 3 Cash paid to suppliers and employees 4 Interest paid 5 Income taxes paid 6 Proceeds from sales of marketable securities 7 Proceeds from sales of plant assets 8 Proceeds from issuing capital stock