The following data are provided for John Mean Corporation.

Balance Sheet (December 31)

2019 2020

Cash $ 68,000 $ 69,000

A/R 24,000 34,000

Inventory 32,000 28,000

Investment (LT) 12,000 0

Fixed assets 160,000 186,000

Acc. Depreciation (96,000) (78,000)

Total assets $200,000 $239,000

A/P $ 38,000 $ 24,000

B/P 20,000 40,000

C/S 100,000 122,000

R/E 42,000 56,000

Treasury stock 0 (23,000)

Additional data for the period January 1, 2020 through December 31, 2020 are:

1. Sales on account, $140,000.
2. Purchases on account, $80,000.
3. Depreciation, $10,000.
4. Expenses paid in cash, $36,000 (including $8,000 of interest and $12,000 in taxes).
5. Decrease in Inventory, $4,000.
6. Disposition of fixed assets for $12,000 cash; cost $42,000 and two-thirds depreciated (loss or gain is included in income).
7. Acquisition of fixed assets for cash $8,000.
8. Fixed assets are exchanged for bonds payable of $60,000.
9. Disposition of investments for $18,000 cash.
10. Purchase of treasury stock for cash, $23,000.
11. Retire B/P by issuing C/S, $20,000.
12. Collections on A/R, $130,000.
13. Sold unused C/S for cash, $2,000.

Required:

1. Prepare a statement of cash flows using the INDIRECT method. (16 marks)
2. Prepare CFO using the DIRECT method. (7 marks)
3. Prepare an income statement for the year, 2020. (7 marks)
4. Which of these two statements, CFO or I/S better reflects profitability? Explain. (4 marks)
5. Suppose 50% of cash is operating. Calculate the change in NOA. (6 marks)