Question-2 7.5+7.5=15 Comparative balance sheets and the income statements for Ellis Company are presented below: Ellis Company Balance Sheets December 31, Year 1 and Year 2 Year2 Year-1 Assets Current assets: Cash Accounts receivable Inventory $45,000 38.000 67,000 $30,000 40.000 60,000 Page 1 of 3 150,000 130.000 162,000 200,000 278,000 150,000 -52,000 -50,000 $538,000 $430,000 Total current assets Long-term investments Plant and equipment Accumulated depreciation Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Accrued liabilities Total current liabilities Bonds payable Mortgage payable Deferred income taxes Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $36,000 24,000 60.000 20,000 100,000 15,000 195,000 $40,000 30,000 70,000 30,000 20,000 120,000 295,000 48,000 343,000 270,000 40,000 310,000 538,000 430,000 Ellis Company Income Statement For the Year Ended December 31, Year 2 Sales $150,000 Less cost of goods sold 76,500 Gross margin 73.500 Less operating expenses 16,000 Net operating income 57,500 Less loss on sale of investment 2.500 Income before taxes Less income taxes 22.000 Net income $33,000 Summary of transactions for Year2 * During Year 2, the company sold for cash of $35,500 long-term investments with a cost of $38.000 when purchased * All sales were on credit * The company paid a cash dividend of $25,000 * Bonds payable of $25,000 were retired by issuing common stock. The bonds retired were equivalent to the market value of the $25,000 stock issued. * An addition to one of the company's buildings was completed on December 31, 55,000 Page 2 of 3 Year 2, at a cost of $128,000. The company gave an interest-bearing mortgage for $100,000 and paid $28,000 in cash * Bonds payable were sold for $15,000 cash at par value. Required: a. Using the indirect method, determine the net cash provided by operating activities for Year 2 b. Using the net cash provided by operating activities figure from either part a, prepare a statement of cash flows for Year 2