Question

H. Prepare a statement of cash flow on both a direct and indirect basis

		2017	2016
Assets:
Cash		225,000	50,000
Accounts receivable, net		95,000	84,000
Inventory		52,000	60,000
Prepaid expenses		13,000	20,000
Investments		70,000	10,000
Property, plant & equipment		750,000	600,000
Accumulated depreciation		(90,000)	(60,000)
Patents		16,000	20,000
Total Assets		1,131,000	784,000
Liabilities & Equity
Accounts payable		44,000	50,000
Accrued liabilities		10,000	20,000
Interest payable		11,000	9,000
Long-term Notes Payable		40,000	50,000
Common stock		250,000	200,000
Additional paid in capital		385,000	260,000
Retained earnings		391,000	195,000
Total liabilities and equity		1,131,000	784,000
Sales		2,150,000
Cost of goods sold		1,200,000
Gross profit		950,000
Operating expenses		560,000
Pre-tax Operating income		390,000
Loss on sale of investments		(5,000)
Gain on sale of equipment		10,000
Pre-tax income		395,000
Income taxes		79,000
Net income		316,000
a. Stock option expense of $35,000 was recognized in 2017
b. Equipment of $200,000 was purchased using cash and $140,000 common stock, with $90,000 excess of par
c. Equipment with cost of $50,000 and book value of $30,000 was sold for $40,000
d. Investments with a cost of $10,000 were sold for $5,000.

Answer 1