The comparative balance sheets and income statement of Piura Manufacturing follow.

Additional transactions for $20$X$2$ were as follows:

Cash dividends of $$8,000$ were paid.

Equipment was acquired by issuing common stock with a par value of $$6,000.$ The fair market value of the equipment is $$32,000.$

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.

Two thousand shares of preferred stock were sold for $$4$ per share.

Required:

Prepare a schedule of operating cash flows using $($a$)$ the indirect method and $($b$)$ the direct method.

Prepare a statement of cash flows using the indirect method.

Prepare a statement of cash flows using a worksheet approach.Piura Manufacturing

Comparative Balance Sheets

For the Years Ended June $30,2022,$ and $2023$

Assets

Liabilities and Equity

Piura Manufacturing

Income Statement

For the Year Ended June $30,2023$

Discuss the merits of the direct and indirect methods. Which do you think investors might prefer? Should the FASB require all companies to use the direct method?