Operating activities portions of the statement of cash flows Indirect and direct methods (25 points)

Comparative financial statements for Wing Company follow:

Wing Company Balance Sheets

December 31, 2018 and 2019

Assets	2018	2019
Current assets:
Cash	$18,000	$15,000
Accounts receivable	25,000	22,000
Inventory	22,000	20,000
Prepaid expenses	10,000	14,000
Total current assets	75,000	71,000
Longterm assets	25,000	7,000
Property, plant, and equipment	80,000	77,000
Less: Accumulated depreciation	(64,000)	(61,000)
Net property, plant, and equipment	16,000	16,000
Total assets	116,000	94,000
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable	$8,000	6,000
Accrued liabilities	15,000	6,400
Total current assets	23,000	12,400
Bonds payable	18,000	12,000
Deferred income taxes	15,000	4,000
Total liabilities	56,000	28,400
Stockholders equity:
Common stock	20,000	30,000
Retained earnings	40,000	35,600
Total stockholders equity	60,000	65,600
Total liabilities and stockholders equity	$116,000	$94,000

Wing Company Income Statement

For the year ended December 31, 2019

Sales	$70,000
Cost of goods sold	40,000
Gross margin	30,000
Depreciation expense	5,000
Other operating expenses	15,000
Net operating income	10,000
Loss on sale of equipment	4,000
Income before taxes	6,000
Income tax expense	2,400
Net income	$3,600

Additional data on activities during 2019 are as follows:

During 2019, Wing Company sold used equipment for $3,000 that had cost $15,000 with accumulated depreciation of $8,000.

. New equipment was purchased for $12,000 cash.

. Cash dividends totaling $8,000 were paid.

. Longterm investments that had cost $18,000 when purchased were sold for $18,000.

. Common stock was issued for $10,000.

Required:

A) Prepare the operating activities section of the statement of cash flows using the indirect method.

B)Prepare the operating activities section of the statement of cash flows using the direct method.