prepare direct method cashflow P$5\mathrm{.}12$ L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December $31,2023$:

L&G Inc. Comparative Statement of Financial Position December $31$

$$

$2023$

$2022$

Cash

$ $57,600$

$ $53,850$

Accounts receivable

$58,000$

$51,000$

Inventory

$40,000$

$60,000$

Prepaid rent

$5,000$

$4,000$

Equipment

$154,000$

$130,000$

Accumulated depreciation$$equipment

$(35,000)$

$(25,000)$

Total assets

$$279,600$

$$273,850$

Accounts payable

$ $46,000$

$ $40,000$

Income tax payable

$4,000$

$6,000$

Long$$term loans payable

$60,000$

$69,000$

Common shares

$130,000$

$130,000$

Retained earnings

$39,600$

$28,850$

Total liabilities and shareholders$$ equity

$$279,600$

$$273,850$

L&G Inc. Income Statement Year Ended December $31,2023$

Sales revenue

$$

$$368,150$

Cost of goods sold

$$

$195,000$

Gross margin

$$

$173,150$

Operating expenses

$$

$120,000$

Operating income

$$

$53,150$

Interest expense

$$11,400$

$$

Gain on disposal of equipment

$(2,000)$

$9,400$

Income before income tax

$$

$43,750$

Income tax expense

$$

$21,000$

Net income

$$

$ $22,750$

Additional information:

Dividends on common shares in the amount of $$12,000$ were declared and paid during $2023.$

Depreciation expense of $$24,000$ is included in operating expenses.

Equipment with a cost of $$20,000$ that was $70\%$ depreciated was sold during $2023.$

Instructions

Prepare a statement of cash flows using the direct method.

Prepare a statement of cash flows using the indirect method.