The following information was drawn from the financial records of The Lord of the Rings Corporation, as at the companys fiscal year-end, September 30, 2018

ADDITIONAL INFORMATION:
Depreciation expense is included in operating expenses.
Accounts payable is related to the purchase of inventory.
During the year, a piece of equipment that originally cost $125,000 was sold for cash. The equipment was 30% depreciated at the time of the sale.
Long-term investments were sold for cash during the year.
REQUIRED:
a. Prepare, in good form, a statement of cash flows for The Lord of the Rings Corporation using the direct method. (17 Marks)
b. Prepare, in good form, only the Operating Activities section of a statement of cash flows for The Lord of the Rings Corporation using the indirect method. (4 Marks)

Assets Cash Accounts receivable Inventory Prepaid operating expenses Long term Investments Equipment Less. Accumulated depreciation 325.000 465.000 675,000 119,000 350,000 1,850,000 (525,000 3.259,000 428,000 318,000 800,000 130,000 500,000 1,785,000 (410,000 3,551,000 Liabilities and Shareholders Equity Accounts payable Current income tax payable Future income tax liability Bonds payable Common shares Retained earnings 322,000 116,000 15,000 718,000 625,000 1,463,000 3,259,000 272,000 167,000 12,000 1,200,000 600,000 1,300,000 3,551,000 The Lord of the Rings Income Statement For the year ended September 30, 2018 Sales Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Gain on sale of equipment Income before income tax Income tax expense: Current Future Net income 1,940,200 1,259,000 681,200 421,600 259,600 7,200 12,500 264,900 62,800 3,000 199,100