Financial statements - Income statement for 20X4 and Comparative Balance Sheet for diving equipment manufacturer Lincoln Corp for December 31, 20X4 and 20X3

Lincoln Corp. - Income Statement as of December 31st, 20X4
Revenue	$	5,000
Cost of Goods Sold	$	3,200
Gross Profit	$	1,800
Operating expenses	$	1,350
Operating Profit	$	450
Loss on sale of equipment	$	20
Income tax expense	$	180
Profit for 2012	$	250

Lincoln Corp. - Balance Sheet - December 31
	20X4			20X3
Assets:
Cash	$	2,350		$	1,800
Accounts Receivable		450			1,000
Inventory		800			700
Prepaid expenses		40			80
Equipment		2,500			1,500
Accumulated Depreciation		(1,350	)		(1,000	)
Total Assets	$	4,790		$	4,080
Liabilities & Shareholders' Equity
Accounts Payable	$	680		$	350
Operating expenses payable		210			100
Income Taxes Payable		120			0
Dividends Payable		50			100
Long term notes Payable		300			70
Common Shares		2,500			2,500
Retained Earnings		930			960
Total Liabilities & Shareholders' Equity	$	4,790		$	4,790

Additional Information for Lincoln Corp:

1) Operating expenses for 20X4 included depreciation for $500

2) Accounts payable relate exclusively to the purchase of inventory

3) Machine with a historical cost of $200 was sold at a loss of $20

4) A new machine was purchased during the year for $1,200

5) Dividends were declared

6) Long term notes payable were issued

Gain realized on the sale of capital assets should be:

a) Included as a positive amount in the financing section of the statement of cash flows

b) Included as a positive amount in the operations section of the statement of cash flows

c) Included as a positive amount in the investment section of the statement of cash flows

d) None of the other alternatives are correct

e) Not included in the cash flow statement because it does not imply an outflow of cash