Attached are the comparative balance sheets at December 31, 20X4 and 20X5 and the income statement for the year ended December 31, 20X5 for Riga, Inc. Additional information is also attached for the year ending December 31, 20X5. REQUIRED: Using the attached form, prepare a statement of cash flows, in proper form, using the direct method, for the year ending December 31, 20X5. Include the reconciliation of net income to net cash flows from operating activities and a schedule of noncash investing and financing activities as part of your statement. RIGA, INC. COMPARATIVE BALANCE SHEETS AT DECEMBER 31, 20X4 AND 20X5 ASSETS Cash Certificate of Deposit, 90 Day Trading Securities Accounts Receivable Allowance For Doubtful Accounts Inventory Prepaid Insurance Land Equipment Accumulated Depreciation, Equipment TOTAL ASSETS S S LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable Customer Deposits Income Taxes Payable Dividends Payable Bonds Payable Discount on Bonds Payable Common Stock, $10 par value Additional Paid In Capital Retained Earnings TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY S $ 12/31/X5 ( 135,000 $ 115,000 20,000 15,000 48,000 23,000 45,400 62.400 2,200) 2,900) 12/31/X4 45,000 $ 15,000 3,500 18,000 100,000 3,300) 80,000 120,000 54,400 432,600 $ ( 27,600 5,500 56,000 122,000 24,000) ( 432,600 $ ( 26,200 4,000 30,000 65,000 16,000) 322,400 83,000 4,000 2,600 16,000 70,000 2,600) 50,000 80,000 19,400 322,400 Sales Cost of Goods Sold Gross Profit RIGA, INC. INCOME STATEMENT FOR YEAR ENDING DECEMBER 31, 20X5 Operating Expenses: General and Administrative Expenses Bad Debt Expense Insurance Expense Depreciation Expense Total Operating Expenses Income From Operations Other Revenues and Gains (Losses and Expenses): Dividend Revenue Interest Expense Loss on Sale of Equipment Total Other Revenues and Gains (Losses and Expenses): Income From Continuing Operations Before Taxes Income Tax Expense Net Income $ ( ( 123,500 3,000 3,600 15,200 1,035 8,235) 500) $ $ ( 895,000 656,000 239,000 145,300 93,700 7,700) 86,000 26,000 60,000 RIGA, INC. ADDITIONAL INFORMATION FOR PREPARING THE STATEMENT OF CASH FLOWS FOR YEAR ENDING DECEMBER 31, 20X5 (a) The company sold equipment with an original cost of $20,000 and accumulated depreciation of $7,200 at a loss of $500. (b) The company purchased equipment during the year in the amount of $70,000 by issuing common stock. All other changes to the equipment account were due to purchases of equipment for cash. (c) The company declared dividends of $25,000 during the year. (d) The company issued $30,000 of 8% bonds payable on January 1 of the current year for $29,065. These bonds have a 15 year maturity and pay interest annually on December 31 of each year. The company amortizes any premium or discount using straight line amortization. (e) The bonds payable outstanding on January 1 of the current year have a stated interest rate of 8% with interest payable annually on December 31 of each year. The bonds have a maturity date of 15 years from the beginning of the year. The company amortizes any premium or discount using straight line amortization. (f) The accounts payable account is used only for purchases of inventory. Customer deposits relate to customer accounts receivable. RIGA, INC. STATEMENT OF CASH FLOWS--DIRECT METHOD FOR YEAR ENDING DECEMBER 31, 20X5 Cash Flows From Operating Activities: Net Cash Inflows (Outflows) From Operating Activities Cash Flows From Investing Activities: Net Cash Inflows (Outflows) From Investing Activities Cash Flows From Financing Activities: Net Cash Inflows (Outflows) From Financing Activities Increase (Decrease) in Cash For Period Add: Cash and Cash Equivalents Balance, January 1, 20X5 Cash and Cash Equivalents Balance, December 31, 20X5 Schedule of Noncash Investing and Financing Activities: RIGA, INC. STATEMENT OF CASH FLOWS--DIRECT METHOD (CONTINUED) FOR YEAR ENDING DECEMBER 31, 20X5 Reconciliation of Net Income to Net Cash Flows From Operating Activities: Net Income Add (Deduct) Items to Reconcile Net Income to Net Cash Flows From Operating Activities: Net Cash Flows From Operating Activities