Prepare a Statement of Cash Flows Using the Direct Method

Sandhill Inc., a greeting card company, had the following statements prepared as of December 31.2025. Sandhill Inc. Comparative Balance Sheet As of December 31.2025 and 2024 12/31/25 Cash Accounts receivable Short-term debt investments (available-for-sale) Inventory Prepaid rent Equipment Accumulated depreciation Copyrights Total assets Accounts payable Income taxes payable equipment Salaries and wages payable Short-term loans payable Long-term loans payable Common stock, $10 par Paid-in capital, common stock Retained earnings Total liabilities and stockholders' equity Income Statemeri For the Year Ending December 31.2025 $6.100 61.600 34.900 39.900 5.000 154,100 (35,000) 45,500 $312,100 $45,800 4,000 8,100 7,900 60.500 100,000 30,000 55,800 $312,100 12/31/24 $7,000 51,500 18,100 60,400 4.100 130,300 (24.900) 50,500 $297,000 $39,900 6.000 4,000 10,000 69,300 100,000 30,000 37,800 $297,000 Sales revenue Cost of goods sold Gross profit Operating expenses Operating income Interest expense Gain on sale of equipment Income before tax Income tax expense Net income Additional information: $11,500 2.000 $333,000 174,000 159.000 119500 39500 9.500 30.000 6.000 $24.000 2 3. 4. Dividends in the amount of $6,000 were declared and paid during 2025. Depreciation expense and amortization expense are included in operating expenses. No unrealized gains or losses have occurred on the investments during the year. Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2025. SANDHILL INC. STATEMENT OF CASH FLOWS czz=zz