Comparative balance sheet accounts of Sharpe Company are presented below.

SHARPE COMPANY

COMPARATIVE BALANCE SHEET ACCOUNTS

AS OF DECEMBER 31

Debit Balances

2017

2016

Cash

$70,000

$51,000

Accounts Receivable

155,000

130,000

Inventory

75,000

61,000

Debt investments (available-for-sale)

55,000

85,000

Equipment

70,000

48,000

Buildings

145,000

145,000

Land

40,000

25,000

Totals

$610,000

$545,000

Credit Balances

Allowance for Doubtful Accounts

$10,000

$ 8,000

Accumulated DepreciationEquipment

21,000

14,000

Accumulated DepreciationBuildings

37,000

28,000

Accounts Payable

66,000

60,000

Income Taxes Payable

12,000

10,000

Long-Term Notes Payable

62,000

70,000

Common Stock

310,000

260,000

Retained Earnings

92,000

95,000

Totals

$610,000

$545,000

Additional data:

• 1.Equipment that cost $10,000 and was 60% depreciated was sold in 2017.
• 2.Cash dividends were declared and paid during the year.
• 3.Common stock was issued in exchange for land.
• 4.Debt investments that cost $35,000 were sold during the year.
• 5.There were no write-offs of uncollectible accounts during the year.

Sharpe's 2017 income statement is as follows.

Sales revenue

$950,000

Less: Cost of goods sold

600,000

Gross profit

350,000

Less: Operating expenses (includes depreciation expense and bad debt expense)

250,000

Income from operations

100,000

Other revenues and expenses

Gain on sale of investments

$15,000

Loss on sale of equipment

(3,000)

12,000

Income before taxes

112,000

Income taxes

45,000

Net income

$67,000

Instructions

(a)Compute net cash provided by operating activities under the direct method.

(b)Compose a statement of cash flows using the indirect method.