Instructions 1. Compute cash receipts from customers.

2. Compute cash payments to suppliers.

3. Compute cash payments for operating expenses.

4. Compute cash payments for income taxes.

5. Compute cash payments for interest.

6. Prepare a statement of cash flows for the year using the indirect method on the next page.

Check digit: Cash flows from operating activities is $109,000. If you add up all your answers above, you should get that number.

7. Based on the cash flow statement you just prepared, write a short paragraph and discuss their quality of income; why cash flows from operating activities is different than net income; what was their major source of cash and what did they do with their cash; what other sources and uses of cash did they have and what happened to cash at the end of the year?

Practice Problems Exam II Condensed financial data of Porter Company appear below PORTER COMPANY Comparative Balance Sheet December 31 2018 2017 Assets Cash Accounts receivable Inventories Prepaid expenses Investments Plant assets Accumulated depreciation S 70,000 82,000 120,000 19,000 80,000 310,000 (65,000) $616,000 $ 35,000 53,000 132,000 25,000 65,000 250,000 (60,000) $500,000 Total Liabilities and Stockholders' Equit Accounts payable Accrued expenses payable Bonds payable Common stock Retained earnings S 95,000 22,000 120,000 245,000 134,000 $616,000 $ 75,000 24,000 150,000 170,000 81.000 $500,000 Total PORTER COMPANY Income Statement For the Year Ended December 31,2018 Sales Less $480,000 Cost of goods sold Operating expenses (includes depreciation expense) Income taxes Interest expense Loss on sale of plant assets S290,000 77,000 15,000 13,000 3,000 398,000 $ 82,000 Net income Additional information 1. Old plant assets costing S25,000 were sold when book value was S13,000 2. Bonds with a face value of S30,000 were converted into $30,000 of common stock