The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2018, appears below: t Service revenue Operating expenses Income before income taxes Income tax expense Net income $1,020,000 760,000 260,000 52,000 $ 208,000 nces The following balance sheet information also is available: Cash Accounts receivable Accounts payable (operating expenses) Income taxes payable 12/31/18 $ 381,000 132,000 82,000 16,000 12/31/17 $ 76,000 106,000 66,000 27,000 In addition, the following transactions took place during the year: 1. Common stock was issued for $112,000 in cash. 2. Long-term investments were sold for $56,000 in cash. The original cost of the investments also was $56,000. 3. $86,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $36,000 in depreciation expense. Required: 1. Prepare a statement of cash flows for 2018 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. 2. Prepare the cash flows from operating activities section of Diversified's 2018 statement of cash flows using the indirect method. Complete this question by entering your answers in the tabs below. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the cash flows from operating activities section of Diversified's 2018 statement of cash flows using the method. (Amounts to be deducted should be indicated with a minus sign.) DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows (Partial) For the Year Ended December 31, 2018 Cash flows from operating activities Net income $ 195,000 Adjustments for noncash effects Depreciation expense 36,000 Changes in operating assets and liabilities: Increase in accounts receivable (26,000) Increase in accounts payable 11,000 Decrease in income taxes payable (16,000) Net cash flows from operating activities $ 200,000 Required 1 Required 2 Prepare a statement of cash flows for 2018 for the Diversified Portfolio Corporation. Use the direct method for re operating activities. (Amounts to be deducted should be indicated with a minus sign.) DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities Collections from customers $ 994,000 Payment of operating expenses (708,000) Payment of income taxes (63,000) $ 223,000 Net cash flows from operating activities Cash flows from investing activities Sale of investments 56,000 56,000 Cash flows from financing activities Proceeds from issue of common stock Payment of dividends 112,000 (86,000) 26,000 305,000 Net cash flows from financing activities Increase in cash Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $ 305,000 Required 1 Required 2 >
