Year o Year 1 Change $ (120) Balance Sheet Assets Cash Receivables Inventories Total current assets Fixed assets Accumulated depreciation Investment in affiliate Goodwill Total assets $ 120 450 1.033 1.623 $240 360 750 1.350 4.500 (1.300) 1.000 1.010 273 1,938 (2-40) 30 (1.740) 1.050 980 $8.351 S1.991 Liabilities and Equity Accounts payable Bonds payable $ 590 700 S 230 400 300 Deferred income taxes Capital stock Additional paid-in capital Retained earnings Total liabilities and equity 240 2.400 900 2.160 $6,360 800 400 141 S1.991 $8.351 Income Statement Sales Cost of goods sold Gross profit Operating income Equity in earnings of affiliate (no dividends received) Gain on sale of fixed assets Income before taxes Income taxes Net income Year! $19.950 11.101 8,849 7.030 1.819 50 SGEA $ 1.869 920 Additional Information 1. In Year 1, XYZ sold machinery bought at $36, for $18, resulting in a $2 gain on income statement 2. $810 in dividends were paid in Year 1. 3. SG&A expense includes $50 of interest expense and amortization expense of $30. 4. Cost of good sold includes depreciation of $260. 5. Income tax expense includes deferred tax liability of $20. a. Prepare cash flows from operations using the direct method. b. Prepare statement of cash flows from operations using the Indirect method