I. Prepare a statement of cash flow on both a direct and indirect basis 2017 2016 Assets: Cash Accounts receivable, net Inventory Prepaid expenses Investments Property, plant & equipment Accumulated depreciation Patents 215,000 87,000 74,000 12,000 70,000 750,000 (90,000) 6,000 1,124,000 70,000 55,000 60,000 20,000 80,000 550,000 (70,000) 10,000 775,000 Total Assets Liabilities & Equity Accounts payable Accrued liabilities Taxes payable Long-term Notes Payable Common stock Additional paid in capital Retained earnings 37,000 26,000 18,000 100,000 200,000 336,000 407,000 1,124,000 50,000 40,000 4,000 200,000 286,000 195,000 775,000 Total liabilities and equity Sales Cost of goods sold Gross profit 1,450,000 780,000 670,000 Operating expenses Pre-tax Operating income Gain on sale of investments Gain on sale of equipment Pre-tax income Income taxes Net income 290,000 380,000 6,000 4,000 390,000 78,000 312,000 a. Stock option expense of $50,000 was recognized in 2017 b. Equipment of $210,000 was purchased using $100,000 note payable and cash c. Equipment with cost of $10,000 and book value of $5,000 was sold for $9,000 d. Investments with a cost of $10,000 were sold for $16,000