APPLY THE CONCEPTS: Prepare the operating activities section The income statement and comparative balance sheets for Leonardo Inc. can be viewed by clicking on the links below. No depreciable assets were purchased or sold during the period; therefore, the increase in Accumulated Depreciation is due to depreciation expense for the period. Complete the operating activities section of the statement of cash flows. Use a minus sign (-) to indicate any negative adjustments.

Leonardo Inc.
Income Statement
For the Year Ended December 31, 2014
Sales		$489,600
Cost of goods sold		254,592
Gross profit		$235,008
Operating expenses:
Depreciation expense	$5,120
Other operating expenses	161,344
Total operating expenses		166,464
Income from operations		$68,544
Other revenue and expenses:
Interest revenue	$960
Gain on sale of land	4,480	5,440
Income before taxes		$73,984
Income taxes		19,584
Net income		$54,400

Leonardo Inc.
Balance Sheets
December 31, 2014
	2014	2013
Assets
Cash	$57,600	$41,600
Accounts receivable (net)	14,400	20,800
Inventories	152,640	145,600
Current assets	$224,640	$208,000
Note Receivable	271,040	118,400
Land	94,080	177,600
Equipment	384,800	384,800
Less: Accumulated depreciation	93,920	88,800
Total assets	$880,640	$800,000
Liabilities
Accounts payable	$8,960	$17,600
Wages payable	41,280	35,200
Current liabilities	$50,240	$52,800
Note payable	123,200	123,200
Total liabilities	$173,440	$176,000
Stockholders' Equity
Common stock	$137,600	$124,800
Additional paid-in capital	306,400	280,800
Retained earnings	263,200	218,400
Total stockholders' equity	$707,200	$624,000
Total liabilities and stockholders' equity	$880,640	$800,000