Sales 3,850,000

Cost of sales 2,270,000

Gross income 1,580,000

Expenses:

Salaries 580,000

Depreciation 240,000

Other expenses 290,000

Bad debts written off 10,000 1,120,000

Net income 460,000

Assets 2009 2008

Cash and cash equivalents 190,000 130,000

Accounts receivable, net 400,000 380,000

Inventory 840,000 910,000

Prepaid Expenses 50,000 40,000

Property, plant and equipment 2,550,000 2,200,000

Accumulated depreciation (700,000) (600,000)

Goodwill 360,000 360,000

3,690,000 3,420,000

Liabilities and equity

Accounts payable 300,000 240,000

Salaries payable 70,000 100,000

Note payable bank -- 250,000

Share capital 2,150,000 1,950,000

Retained earnings 1,170,000 880,000

3,690,000 3,420,000

Additional information

1. A cash dividend of 170,000 was declared and paid during the year.
2. Equipment of 200,000 with accumulated depreciation of 140,000 was sold for cash at no gain or loss.
3. The net change in the equipment after considering the equipment sold was the result of a cash acquisition.
4. The note payable bank matured this year and was accordingly paid in cash.
5. The share capital was issued for cash.

Required:

1. Prepare statement of cash flows for the year ended December 31, 2009 using the direct method.
2. Compute the cash flow from operating activities using the indirect method.