ANSWER A & B

Comparative balance sheet accounts of Sage inc are presented below. Additional data (ignoring taxes): 1. Net income for the year was $42,000. 2 Cash dividends declared and paid during the year were $21,000. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. Equity investments (level of ownership is less than 20% ) that cost 4. $25,100 were sold during the year for $28,800. No unrealized gains and losses were recorded on these investments in 2020 . 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. Sage's 2020 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin $541,900381,300160,600 Less: Operating expenses (includes $8,950 depreciation and $5,933 bad debts) Income from operations 39,100121,500 Other: Gain on sale of investments $3,700 Loss on sale of machinery Net income $42,000(800)2,900 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net cash flow from operating activities $ (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. 15,000 or in parenthesis e.g. (15,000)