P23-6B (L02,3,4) (SCFIndirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Easton Inc. are presented below and on the next page.

EASTON INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2017 AND 2016 Cash Accounts receivable Inventory Investments (available-for-sale) Land Buidings Equipment Total debits December 31, 2017 $ 40,500 120,500 81,000 41,000 25,000 98,000 60.800 December 31, 2016 $ 33,600 96,000 85,600 65,000 25,000 76,000 41,000 $422,200 $466,800 Allowance for doubtful accounts Accumulated depreciation-buildings Accumulated depreciation-equipment Accounts payable Salaries and wages payable Long-term notes payable Common stock Paid-in capital in excess of par-common stock Retained earnings Total credits $ 3,600 26,800 19,300 63,000 6,000 45,000 11,000 201,000 91.100 $ 3,000 2200 12,700 70,000 11,600 60,000 10,000 164,500 67,200 $422.200 S166 Additional data (ignoring taxes): 1. Net income for the year was $71,400. 2. Cash dividends declared and paid during the year were $10,000. 3. A 10% stock dividend was declared during the year. $37,500 of retained earnings was capitalized. 4. Investments that cost $24,000 were sold during the year for $29,500. 5. Equipment that cost $5,400, on which $3,600 of depreciation had accumulated, was sold for $2,200. Easton's 2017 income statement follows (ignoring taxes). Sales Less: cost of goods sold Gross margin Less: Operating expenses (includes $13,800 depreciation and $4,100 bad debts) Income from operations Other: Gain on sale of investments Gain on sale of machinery Net income $855.600 538,900 316,700 251 200 65,500 $5,500 400 5.900 $ 71.400 Instructions (a) Compute net cash flow from operating activities using the direct method. (b) Prepare a statement of cash flows using the indirect method