Q1 The comparative balance sheets for Year 2 and Year 1 as well as the statement of income for Year 2 are provided below for That's a Wrap: Year 2 Year 1 20,000 33,000 That's a Wrap Balance Sheet December 31, Year 2 and Year 1 Assets Cash Accounts Receivable, less allowance for uncollectible accounts of 4,000 and 3,000 respectively Dividends Receivable Inventory Long-term investment Land Building and equipment accumulated depreciation Total Assets 44,000 3,000 55,000 15,000 70,000 225,000 (25,000) 420,000 47,000 2,000 50,000 10,000 40,000 250,000 (50,000) 369,000 13,000 2,000 4,000 7,000 30,000 20,000 5,000 2,000 8,000 Liabilities & Stockholders' Equity Liabilities Accounts payable Salaries payable Interest payable Income tax payable Notes payable Bonds payable, less discount of 2,000 and 3,000 respectively Stockholders' Equity Common Stock Paid-in capital- excess of par Retained Earnings Treasury stock Total Liabilities & Stockholders' Equity 93,000 67,000 210,000 24,000 45,000 (8,000) 420,000 200,000 20,000 47,000 369,000 $ 200,000 120,000 80,000 That's a Wrap Balance Sheet December 31, Year 2 Sales Revenue Cost of goods sold Gross profit Operating Expenses Salaries expense Depreciation expense Bad debt expense loss on the sale of building Operating income Non-operating revenues/expenses) Dividend revenue Interest expense Income before taxes income tax expense Net Income 25,000 5,000 1,000 3,000 46,000 3,000 (8,000) 41,000 16,000 25,000 $ Additional information: 1. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000. 2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment. 3. Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller. 4. On January 1, 2021, bonds were sold at their $25,000 face value. 5. On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time. Required: Prepare a statement of cash flows for "That's a Wrap" using the direct method