P$6$

The following is a comparative balance sheet for Laurel Clothiers Inc. for the years $20$X$5$ and $20$X$4$:

Laurel Clothiers Inc.

Comparative Balance Sheet December $31,20$X$5$ and $20$X$4$

Assets $20$X$520$X$4$

Cash P $43,000$ P $240,000$

Accounts receivable $390,000210,000$

Inventory $360,000450,000$

Long$-$term investments $0120,000$

Total assets P $793,000$ P $1,020,000$

Liabilities and Equities :

Accounts payable P $150,000$ P $240,000$

Operating expenses payable $48,00030,000$

Bonds payable $140,000200,000$

Ordinary shares $250,000250,000$

Retained earnings $205,000300,000$

Total liabilities and equities P $793,000$ P $1,020,000$

The income statement for the year ended December $31,20$X$5,$ follows:

Laurel Clothiers Income Statement For the Year Ended December $31,20$X$5$

Sales P $1,120,000$

Cost of goods sold:

Beginning inventory, January $1,20$X$5$ P $450,000$

Purchases $660,000$

Cost of goods available P $1,110,000$

Less ending inventory, December $31,20$X$5360,000750,000$

Gross profit on sales P $370,000$

Operating expenses $360,000$

Operating income P $10,000$

Other revenues and expenses:

Loss on sale of long$-$term investment $(15,000)$

Net loss P $(5,000)$

After paying cash dividends, the decrease in retained earnings totaled P$95,000.$ Management is alarmed by the shrinkage in the company's cash position during $20$X$5.$ Prepare a statement of cash flows for $20$X$5$ using the direct method.