The comparative balance sheets and income statement of Piura Manufacturing follow. Piura Manufacturing Comparative Balance Sheets For the Years Ended June 30, 20X1 and 20X2 1 20X1 20X2 2 Assets: 3 Cash $72,000.00 $146,400.00 4 Accounts receivable 44,000.00 48,000.00 5 Inventory 64,000.00 44,000.00 6 Plant and equipment 104,000.00 112,000.00 7 Accumulated depreciation (52,000.00) (48,000.00) 8 Land 20,000.00 20,000.00 9 Total assets $252,000.00 $322,400.00 10 Liabilities and equity: 11 Accounts payable $32,000.00 $48,000.00 12 Wages payable 4,000.00 2,400.00 13 Bonds payable 24,000.00 16,000.00 14 Preferred stock (no par) 4,000.00 12,000.00 15 Common stock 30,000.00 36,000.00 16 Paid-in capital in excess of par 50,000.00 76,000.00 17 Retained earnings 108,000.00 132,000.00 18 Total liabilities and equity $252,000.00 $322,400.00 Piura Manufacturing Income Statement For the Year Ended June 30, 20X2 1 Sales $320,000.00 2 Cost of goods sold (200,000.00) 3 Gross margin $120,000.00 4 Operating expenses (88,000.00) 5 Net income $32,000.00 Additional transactions for 20X2 were as follows: A. Cash dividends of $8,000 were paid. B. Equipment was acquired by issuing common stock with a par value of $6,000. The fair market value of the equipment is $32,000. C. Equipment with a book value of $12,000 was sold for $6,000. The original cost of the equipment was $24,000. The loss is included in operating expenses. D. Two thousand shares of preferred stock were sold for $4 per share.

Required: 1. Prepare a schedule of operating cash flows using (a) the indirect method and (b) the direct method. 2. Prepare a statement of cash flows using the indirect method. 3. Prepare a statement of cash flows using a worksheet similar to the one shown in Example 14.8 (p. 804). 4. As far as the direct and indirect methods, which would investors prefer?