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The following comparative balance sheet and other information relate to Carlson Company. (10 points) Carlson Company Comparative Balance Sheets December 31, 20x5 and 20x4 Assets

The following comparative balance sheet and other information relate to Carlson Company.

(10 points)

Carlson Company

Comparative Balance Sheets

December 31, 20x5 and 20x4

Assets

20x5

20x4

Cash

$ 140

$ 140

Accounts receivable (net)

210

280

Inventory

350

420

Prepaid expenses

105

70

Equipment (net)

3,010

2,800

Investments and other assets

4,900

4,200

Total assets

$8,715

$7,910

Liabilities and Stockholders' Equity

Accounts payable

$ 350

$ 280

Income taxes payable

70

140

Long-term note payable

2,100

1,400

Common stock

1,400

1,400

Retained earnings

4,795

4,690

Total liabilities and stockholders' equity

$8,715

$7,910

Additional information:

Depreciation expense $560

Cash dividends declared and paid 50

a. Compute net income, assuming net income and the cash dividends were the only items affecting retained earnings. Show your work.

b. Compute net cash flows from operating activities using the indirect method.

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