Problem 4-9 Statement of cash flows [LO4-8]

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2016, appears below:

Service revenue	$	1,020,000
Operating expenses		760,000
Income before income taxes		260,000
Income tax expense		52,000
Net income	$	208,000

The following balance sheet information also is available:

	12/31/16		12/31/15
Cash	$	381,000	$	76,000
Accounts receivable		132,000		106,000
Accounts payable (operating expenses)		82,000		66,000
Income taxes payable		16,000		27,000

In addition, the following transactions took place during the year:
1.	Common stock was issued for $112,000 in cash.
2.	Long-term investments were sold for $56,000 in cash. The original cost of the investments also was $56,000.
3.	$86,000 in cash dividends was paid to shareholders.
4.	The company has no outstanding debt, other than those payables listed above.
5.	Operating expenses include $36,000 in depreciation expense.

Required:

1.

Prepare a statement of cash flows for 2016 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.) 2) Prepare the cash flows from operating activities section of Diversifieds 2016 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)