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The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: Service revenue$ 1,160,000Operating
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below:
Service revenue$ 1,160,000Operating expenses830,000Income before income taxes330,000Income tax expense82,500Net income$ 247,500The following balance sheet information also is available:
12/31/202412/31/2023Cash$ 441,500$ 83,000Accounts receivable146,000113,000Accrued liabilities (for operating expenses)96,00073,000Income taxes payable23,00041,000In addition, the following transactions took place during the year:
- Common stock was issued for $126,000 in cash.
- Long-term investments were sold for $63,000 in cash. The original cost of the investments also was $63,000.
- $93,000 in cash dividends was paid to shareholders.
- The company has no outstanding debt, other than those payables listed above.
- Operating expenses include $43,000 in depreciation expense.
Required:
- Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities.
- Prepare the cash flows from operating activities section of Diversifieds 2024 statement of cash flows using the indirect method.
1. Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities.DIVERSIFIED PORTFOLIO CORPORATIONStatement of Cash FlowsFor the Year Ended December 31, 2024Cash flows from operating activities: cash received from customers0 cash paid for operating expenses0 cash paid for income taxes0 Net cash flows from operating activities 1160000Cash flows from investing activities: 0 0 Net cash flows from investing activities 0Cash flows from financing activities: 0 0 0 Net cash flows from financing activities 0Increase in cash 1160000Cash and cash equivalents, January 1 0Cash and cash equivalents, December 31
1160000
2. Prepare the cash flows from operating activities section of Diversifieds 2024 statement of cash flows using the indirect method.DIVERSIFIED PORTFOLIO CORPORATIONStatement of Cash Flows (Partial)For the Year Ended December 31, 2024Cash flows from operating activities: 0 Adjustments for noncash effects: 0 Changes in operating assets and liabilities: 0 0 0 0 0 Net cash flows from operating activities 0
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