Prepare CFO under the DIRECT method using the data set of problem (a) P4-48 (12 marks) Classify interest income as CFO.

P4-48. Preparing a Statement of Cash Flows (Indirect Method) Arctic Company's income statement and comparative balance sheets follow. ARCTIC COMPANY Income Statement For Year Ended December 31, 2013 $728,000 Sales ..... Cost of goods sold Wages expense... Advertising expense Depreciation expense. Interest expense.. Gain on sale of land.. Net loss ... $534,000 190,000 31,000 22,000 18,000 (25,000) 770,000 $ (42,000) P4-48 STATEMENT OF CASH FLOWS (INDIRECT METHOD) ARCTIC COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Net Cash Flow from Operating Activities Net Loss S (42,000) Add (Deduct) Items to Convert Net Loss to Cash Basis Depreciation 22.000 Gain on Sale of Land (25,000) Accounts Receivable Decrease 8,000 Inventory Decrease 6.000 Prepaid Advertising Decrease 3,000 Accounts Payable Decrease (14.000) Interest Payable Increase 6.000 Net Cash Used by Operating Activities Cash Flows from Investing Activities Sale of Land 70,000 Purchase of Equipment (183.000)* Net Cash Used by Investing Activities Cash Flows from Financing Activities Issuance of Bonds Payable 200,000 Purchase of Treasury Shares (30.000) Net Cash Provided by Financing Activities Net Increase in Cash Cash at Beginning of Year Cash at End of Year * The sum of the increase in PPE assets account (5138,000) and the book value of the land sold ($45,000). $ (36,000) (113,000) 170.000 21,000 28.000 $ 49,000