In: Accounting
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
Service revenue | $ | 1,060,000 |
Operating expenses | 780,000 | |
Income before income taxes | 280,000 | |
Income tax expense | 84,000 | |
Net income | $ | 196,000 |
The following balance sheet information also is
available:
12/31/18 | 12/31/17 | ||||
Cash | $ | 375,000 | $ | 78,000 | |
Accounts receivable | 136,000 | 108,000 | |||
Accounts payable (operating expenses) | 86,000 | 68,000 | |||
Income taxes payable | 18,000 | 31,000 | |||
In addition, the following transactions took place during the
year:
Required:
1. Prepare a statement of cash flows for 2018 for
the Diversified Portfolio Corporation. Use the direct method for
reporting operating activities.
2. Prepare the cash flows from operating
activities section of Diversified’s 2018 statement of cash flows
using the indirect method.