Fix Corporations 2012 income statement and its comparative balance sheets as of June 30, 2012 and 2011 appear below. The following additional information about 2012: (a). Equipment that cost $9,600 with accumulated depreciation of $6,800 was sold at a loss of $1,600;

(b). Land and building were purchased in the amount of $40,000 through an increase of $40,000 in the mortgage payable;

(c). A $8,000 payment was made on the mortgage;

(d). the notes were repaid, but the company borrowed an additional $12,000 through the issuance of a new note payable;

(e). a $24,000 cash dividend was declared and paid.

TASKS

1. Use the indirect method to prepare a Statement of Cash Flows. 6 marks

2. Prepare Net Cash Flows only from Operating Activities under the Direct method

Income Statement for the Year Ended June 30, 2012 $ Sales Cost of Goods Sold Gross Margin Operating Expenses (including Depreciation of $24,000) Income from Operations Other Income (Expense): Loss on Disposal of Equipment (1,600) Interest Expense (15.040) Income Before Income Taxes Income Taxes $ 416,360 (262,520) 153,840 (75,680) 78,160 (16.640) 61,520 (13.680) Net Income 47,840 Comparative Balance Sheets June 30, 2012 and 2011 2012 2011 Assets $ $ Current Assets Cash Accounts receivable (net) Inventory Prepaid Expenses 66,800 40,000 72,000 240 8,000 48,000 88,000 400 Property, Plant and Equipment 251,200 220,800 (56,000) 309,200 Accumulated Depreciation (73,200) Total Assets 357,040 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable 25,600 16,800 Income Taxes Payable Notes Payable (Long-Term) Mortgage Payable 10,400 12,000 144,000 7,200 32,000 112,000 Common Stock, $5 par value 80,000 80,000 Retained Earnings 85,040 61,200 Total Liabilities and SHE 357,040 309,200