/P14-5A The financial statements of Louis Zimmer Company appear belowi Louis ZIMMER COMPANY Comparative Balance Sheets December 31 Assets 2006 Cash $ 31,000 Accounts receivable 28.000 Merchandise inventory 25.000 Property, plant, and equipment 60,000 Accumulated depreciation (22.000) Total $122.000 Liabilities and Stockholders' Equity Accounts payable $ 27.000 5.000 Income taxes payable 27.000 Bonds payable 18.000 Common stock 45.000 Retained earnings $122.000 Total 2005 $ 13.000 14.000 35.000 78.000 (24,000) $116.000 18,000 14,000 (10,000 Cleo01 2000 G OO) $ 23.000 4000 8.000 (300) 35.000 (90 ) 14.000 C1000 36.000 poo $116,000 Louis ZIMMER COMPANY Income Statement For the Year Ended December 31, 2006 $220.000 Sales Cost of goods sold 180.000 Gross profit 40,000 Selling expenses $14.000 Administrative expenses 8.000 22.000 Income from operations 18.000 Interest expense Income before income taxes 17.000 Income tax expense 4,000 Net income $ 13.000 1.000 Additional information: 1. Dividends declared and paid were $4,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost $18.000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense is in the selling expense category. $7,500 4. All sales and purchases are on account. Instruction: Prepare Cash Flow Statement using direct method