The income statement and unclassified statement of financial position for Pharoah, Inc. follow: PHAROAH, INC. Statement of Financial Position December 31 Assets 2018 Cash $99,600 Held for trading investments 128,000 Accounts receivable 72,500 Inventory 123,200 Prepaid expenses 19.000 Property, plant, and equipment 319,500 Accumulated depreciation (49,000) Total assets $712.800 Liabilities and Shareholders' Equity Accounts payable $92,500 Accrued liabilities 11,000 Bank loan payable 72,300 Common shares 290,000 Retained earnings 247,000 Total liabilities and shareholders' equity $712,800 2017 $47,400 112,500 41,700 94.550 26,000 296,000 (53,000) $565.150 $72,900 7,400 197,350 180,000 107,500 $565,150 PHAROAH, INC. Income Statement Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Income from operations Other revenues and expenses Unrealized gain on held for trading investments $15,500 Interest expense (4,710) Income before income tax $543.700 185,700 358,000 116,500 241,500 10,790 252.290 Income before income tax Income tax expense Net income 252,290 46,000 $206,290 Additional information: 1. Prepaid expenses and accrued liabilities relate to operating expenses. 2. An unrealized gain on held for trading investments of $15,500 was recorded. 3. New equipment costing $86,000 was purchased for $24,000 cash and a $62,000 long-term bank loan payable. 4. Old equipment having an original cost of $62,500 was sold for $1,100. 5. Accounts payable relate to merchandise creditors. 6. Some of the bank loan was repaid during the year. 7. A dividend was paid during the year. 8. Operating expenses include $46,300 of depreciation expense and a $11,100 loss on disposal of equipment. Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis eg. (15,000).) PHAROAH, INC. Statement of Cash Flows-Direct Method Prepare the statement of cash flows, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis eg. (15,000).) PHAROAH, INC. Statement of Cash Flows Direct Method Cash Payments Note X to the Statement of Cash Flows: During the year, the company purchased equipment costing $ by paying $24,000 cash and issuing a $62,000 bank loan payable