Problem 23-6 Comparative balance sheet accounts of Metlock Inc. are presented below. METLOCK INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31, 2017 AND 2016 December 31 Debit Accounts 2017 2016 Cash $41,600 $34,100 Accounts Receivable 70,900 60,400 Inventory 30,100 23,900 Equity investments 22,400 38,400 Machinery 29,700 18,900 Buildings 67,000 55,800 Land 7,600 7,600 $269,300 $239,100 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $2,200 5,600 13,600 34,800 3,300 21,200 150,000 38,600 $269,300 $1,500 2,200 9,000 25,000 2,600 31,200 125,000 42,600 $239,100 Additional data ignoring taxes): 1. Net income for the year was $42,200. 2. Cash dividends declared and paid during the year were $21,200. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $24,800 were sold during the year for $28,500. No unrealized gains and losses were recorded on these investments in 2017. 5. Machinery that cost $3,700, on which $750 of depreciation had accumulated, was sold for $2,150. Metlock's 2017 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,750 depreciation and $5,192 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income $539,700 378,700 161,000 121,700 39,300 $3,700 (800) 2,900 $42,200 (a) Compute net cash flow from operating activities using the direct method. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Net cash flow from operating activities (b) Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) METLOCK INC. Statement of Cash Flows (Indirect Method) Adjustments to reconcile net income to