Problem 13-A Cash Flows, Operating Activities - Direct & Indirect Requirements: Prepare the operating activities section of the Statement of Cash Flows using: (1) the direct method and (2) the indirect method for the Beet Company. Balance Sheet December 31, Year 2 Year 1 Cash 2 3 Accounts receivable 2 Inventory 6 Plant and equipment 40 30 Accumulated depreciation (27) (24) Total assets 25 20 mno 5 8 Accounts payable Accrued liabilities Common stock Retained earnings Total liabilities and owners' equity 1 6 10 8 25 5 4 10 1 20 3 Income Statement Sales Less cost of goods sold Gross margin Less operating expenses Net Income 70 (50) 20 (10) 10 Problems 13-B Statement of Cash Flows Requirements: For the Spinach Company, for the year ended December 31 of Year 2, prepare: 1) A Statement of Cash Flows, using the Direct Method, showing cash flows from operating, investing and financing activities. 2) The operating section of the Statement only, using the Indirect Method. Problem 13-B Spinach Company Statement of Cash Flows Balance Sheet Cash Accounts receivable Inventory Prepaid expenses Long-term investments Plant and equipment Accumulated depreciation Total assets December 31, Year 2 Year 1 8 15 17 10 20 11 2 4 43 50 90 65 (50) (30) 130 125 Accounts payable Accrued liabilities Income taxes payable Bonds payable (due in 18 years) Common stock Retained earnings Total liabilities and owners' equity 11 13 6 15 55 30 130 15 12 3 20 50 25 125 Income Statement Sales Less cost of goods sold Gross margin Less operating expenses Net operating Income Gain on sale of investments Loss on sale of equipment Less income tax expense Net income 400 (280) 120 (90) 30 2 (1) (8) 23 Notes: a) Investments that cost $7 were sold for $9. b) Equipment that cost $15 and had Accumulated Depreciation of $10 was sold for $4. c) The company paid a cash dividend. Notes Done just do 13-b using the statement of cash flows using the 1. Direct method and the indirect method for spinach company