The balance sheet for December 31, 2010, December 31, 2009, and the income statement for the year ended December 31, 2010, for XYZ Company follows. " Prepare a cash flow statement using direct method XYZ Company Balance Sheet December 31, 2010 and 2009 2010 2009 Assets Cash $ 25,000 $20,000 Accounts receivable, net 60,000 70,000 Inventory 80,000 100,000 Land 50,000 50,000 Building and equipment 130,000 115,000 Accumulated depreciation (85,000) (70,000) Total assets $ 260,000 $285,000 Liabilities and Stockholders' Equity Accounts payable $ 30,000 $ 35,000 Income taxes payable 4,000 3,000 Wages payable 5,000 3,000 Current notes payable 50,000 60,000 Common stock 110,000 100,000 Retained earnings 61,000 84,000 Total liabilities and stockholders' equity $260,000 $285,000 XYZ Company Income Statement For the Year Ended December 31, 2010 Sales $500,000 Less expenses: Cost of goods sold $330,000 Selling and administrative expenses including depreciation 90,000 Interest expense 5,000 Total expenses 425,000 Income before taxes $ 75,000 Income tax expense 30,000 Net income

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