Stallion Ltd. has prepared the following comparative statements of financial position at December 31, 2021 and 2022: Stallion adheres to ASPE.

2022 2021

Cash........................................................................................ $ 99,000 $ 51,000

Accounts receivable................................................................ 53,000 39,000

Inventory................................................................................ 50,000 60,000

Prepaid expenses..................................................................... 6,000 9,000

Property, plant & equipment.................................................. 420,000 350,000

Accumulated depreciation...................................................... (150,000) (125,000)

Goodwill................................................................................. 51,000 58,000

$ 529,000 $ 442,000

Accounts payable.................................................................... $ 51,000 $ 56,000

Accrued liabilities................................................................... 20,000 14,000

Mortgage payable................................................................... 150,000

Preferred shares...................................................................... 215,000

Common shares...................................................................... 200,000 200,000

Retained earnings.................................................................... 43,000 22,000

$ 529,000 $ 442,000

1. The Accumulated Depreciation account has been credited only for the depreciation expense for the year. There were no disposals of property, plant and equipment, but new equipment was purchased during 2022.

2. Depreciation expense and a charge for impairment of goodwill have both been included in operating expenses.

3. The Retained Earnings account was debited for cash dividends declared and paid of $ 46,000, and credited for the net income for the year.

The condensed income statement for 2022 is as follows:

Sales.............................................................................. $ 660,000

Cost of sales.................................................................. 363,000

Gross profit................................................................... 297,000

Operating expenses....................................................... 230,000

Net income.................................................................... $ 67,000

Instructions

From the information above, prepare the operating section of the case flow statement using EITHER the direct method OR the indirect method for calendar 2020. You do not need to do both.