ILL.UNLOA DA IULICWLCompany PICILLU I F12.JA. Instructions Prepare the operating activities section of the statement of cash flows using the direct method. P12.7A (LO 2, 3), AP Presented below are the financial statements of Warner Company. Prepare the operating activities section-direct method. - Excel Net cash provided $305,000 Warner Company Comparative Balance Sheets December 31 Prepare a statement of cash flows- indirect method, and compute free cash flow: Excel 2022 $ 35,000 20,000 28,000 60,000 (32,000) $111,000 2021 $ 20,000 14,000 20,000 78,000 (24,000) $108,000 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $ 19,000 7,000 17,000 18.000 50,000 $ 15,000 8,000 33,000 14,000 38.000 $108,000 $111.000 Warner Company Income Statement For the Year Ended December 31, 2022 $242,000 175,000 67,000 $18,000 6,000 Sales revenue Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income 24,000 43,000 3,000 40,000 8,000 $ 32,000 Page 12-56 of o 12-56 CHAPTER 12 Statement of Cash Flows Additional data: 1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale