Please help with this problem and explain as well. Thank you!!! The Diversified Portfolio Corporation provides investment
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Please help with this problem and explain as well. Thank you!!!
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2016, appears below: |
Service revenue | $ | 960,000 |
Operating expenses | 730,000 | |
Income before income taxes | 230,000 | |
Income tax expense | 46,000 | |
Net income | $ | 184,000 |
The following balance sheet information also is available: |
12/31/16 | 12/31/15 | |||
Cash | $ | 348,000 | $ | 73,000 |
Accounts receivable | 126,000 | 103,000 | ||
Accounts payable (operating expenses) | 76,000 | 63,000 | ||
Income taxes payable | 13,000 | 21,000 |
In addition, the following transactions took place during the year: | |
1. | Common stock was issued for $106,000 in cash. |
2. | Long-term investments were sold for $53,000 in cash. The original cost of the investments also was $53,000. |
3. | $83,000 in cash dividends was paid to shareholders. |
4. | The company has no outstanding debt, other than those payables listed above. |
5. | Operating expenses include $33,000 in depreciation expense. |
Required: | |
1. | Prepare a statement of cash flows for 2016 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities.(Amounts to be deducted should be indicated with a minus sign.) |
2. | Prepare the cash flows from operating activities section of Diversified?s 2016 statement of cash flows using the indirect method.(Amounts to be deducted should be indicated with a minus sign.) |
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