Statement of Cash Flows (Direct Method) Dair Company's income statement and comparative balance sheets follow. DAIR COMPANY Income Statement For Year Ended December 31,2011 Sales $700,000 Cost of goods sold $440,000 Wages and other operating expenses 95,000 Depreciation expense 19,000 Amortization expense 6,000 Interest expense 12,000 Income tax expense 35,000 Loss on bond retirement 3,000 610,000 Net income $90,000 Assets DAIR COMPANY Balance Sheets Dec. 31, 2011 Dec. 31, 2010 Cash $ 40,000 $22,000 Accounts receivable 53,000 48,000 Inventory 103,000 109,000 Prepaid expenses 12,000 9,000 Plant assets 348,000 329,000 Accumulated depreciation (84,000) (84,000) Intangible assets 44,000 50,000 Total assets $516,000 $ 483,000 Liabilities and Stockholders' Equity Accounts payable Interest payable $ 36,000 $ 26,000 4,000 7,000 Income tax payable 5,000 8,000 Bonds payable 55,000 115,000 Common stock 252,000 228,000 Retained earnings 164,000 99,000 Total liabilities and equity $516,000 $483,000