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Chapter 24 Statement of Cash Flows P24-9 (SCF--Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Com- parative balance sheet accounts of Jon Secada Inc. are presented below: Jon Secada Inc. COMPARATIVE BALANCE SHEET ACCOUNTS December 31, 2019 and 2018 38 900 - 25,000 5/8, 50 22,250 -18, Tos - -375 Debit Accounts Cash Accounts Recalvable Marchandise Inventory Investments (avallable-for-sale) Machinery Buildings December 31 2019 2018 $ 45.000 $ 33,750 67,500 60,000 30.000 24,000 22,250 38,500 30,000 18,750 67,500 7,500 $269,750 $238,750 18,750 -3.750 56,250 7,500 Land =15,000 Totals 15,093+15.000-300 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Note Payable Common Stock, no par Retained Eamings Total $ 2,250 5,625 13,500 30,000 3,375 28,000 150,000 39,000 $269,750 $ 1,500 2,250 9,000 24,750 2,625 31,000 125,000 42,625 $238,750 67,00 56, 22 11,250 Additional data: (ignore taxes) 1. Net income for the year was $42,500. 2 Cash dividends declared during the year were $21,125. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Investments that cost $20,000 were sold during the year for $23,750. 5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200. Jon Secada's 7019income statement follows (ignore taxes): Sales $540,000 Lass cost of goods sold 380,000 Gross margin 160,000 Loss operating expenses (includes $8,625 depreciation and $5,400 bad 120,450 debts) Income from operations 39,550 Other: Gain on sale of Investments $3,750 Loss on sale of machinery (800) 2,950 Net Income $ 42.500 Instructions (a) Compute net cash flow from operating activities using the direct method. (b) Prepare a statement of cash flows using the Indirect method