Land costing $15,000.00 was sold for $15,000.00

2- Mortgage note was issued for $40,000.00

3- A building costing $115,000.00 was constructed.

4- 2,500 shares of common stock were issued at $40.00 in exchange for theBonds payable.

5- Cash dividends declared were $74,670.00

Prepare the:

1- Statement of cash flow - Direct method.

2- Statement of cash flow - Indirect method.

Dowling Company

Corporative Balance Sheet

December 31, 2012 and 2011

Assets	2012	2011
Cash	$ 140,350.00	$ 95,900.00
Account receivable (net)	$ 95,300.00	$ 102,300.00
Inventories	$ 165,200.00	$ 157,900.00
Prepaid expenses	$ 6,240.00	$ 5,800.00
Investments (long term)	$ 35,700.00	$ 84,700.00
Land	$ 75,000.00	$ 90,000.00
Buildings	$ 375,000.00	$ 260,000.00
Accumulated depreciations-buildings	$ (71,300.00)	$ (58,300.00)
Machinery and equipment	$ 428,300.00	$ 428,300.00
Accumulated depreciations-machinery and equipment	$ (148,500.00)	$ (138,000.00)
Patents	$ 58,000.00	$ 65,000.00
Total assets	$ 1,159,290.00	$ 1,093,600.00

Liabilities and Stockholders Equity
Accounts payable (merchandise creditors)	$ 43,500.00	$ 46,700.00
Accrued expense payable (operating expense)	$ 14,000.00	$ 12,500.00
Income taxes payable	$ 7,900.00	$ 8,400.00
Dividends payable	$ 14,000.00	$ 10,000.00

Dowling Company

Income Statement

For the Year Ended December 31, 2012

Sales		$ 1,100,000.00
Cost of merchandise sold		$ 710,000.00
Gross profit		$ 390,000.00
Operating Expense:
Depreciation Expense	$ 23,500.00
Patent amortization	$ 7,000.00
Other Operating expense	$ 196,000.00
Total operating expense		$ 226,500.00
Income from operations
Other income:
Gain on sale of investments	$ 11,000.00
Other expenses:
Interest expense	$ 26,000.00	$ (15,000.00)
Income before income tax		$ 148,500.00
Income tax expense		$ 50,000.00
Net Income		$ 98,500.00

Mortgage note payable, due 2023	$ 40,000.00	$ -
Bonds payable	$ 150,000.00	$ 250,000.00
Common stocks. $30.00 par	$ 450,000.00	$ 375,000.00
Excess of issue over par-common stocks	$ 66,250.00	$ 41,250.00
Retained earnings	$ 373,640.00	$ 349,810.00
Total liabilities and stockholders equity	$ 1,159,290.00	$ 1,093,660.00

Dowling Company

Statement of Cash Flow Indirect Method

December 31, 2012 and 2011

Cash flow from operating activities:
Net Income
Adjustments to reconcile net income to net cash flow from
operating activities:
Depreciation
Amortization of patent
Gain on sale of investments
Changes in current operating assets and liabilities:
Decrease in account receivable
Increase in inventories
Increase in prepaid expenses
Decrease in accounts payable
Increase in accrued expense payable
Decrease in income taxes payable
Net cash flow from operating activities
Cash flow from investing activities:
Cash received from sale of:
Investments
Land
Less: Cash paid for construction of building
Net cash flow used for investing activities
Cash flow from financing activities:
Cash received from issuing mortgage note payable
Less; Cash paid for dividends
Net cash flow used for financing activities
Increase in cash
Cash at the beginning of the year
Cash at the end of the year
Schedule of Noncash Investing and Financing Activities		$ 100,000.00

Dowling Company

Statement of Cash Flow - Direct Method

December 31, 2012 and 2011

Cash flow from operating activities:
Cash received from customers
Deduct: Cash paid for merchandise
Cash paid for operating expenses
Cash paid for interest expenses
Cash paid for income taxes
Net cash flow from operating activities
Cash flow from investing activities:
Cash received from sale of:
Investments
Land
Less: Cash paid for construction of building
Net cash flow used for investing activities
Cash flow from financing activities:
Cash received from issuing mortgage note payable
Less; Cash paid for dividends
Net cash flow used for financing activities
Increase in cash
Cash at the beginning of the year
Cash at the end of the year
Schedule of Noncash Investing and Financing Activities		$ 100,000.00