| P23-8. | (SCF—Direct and Indirect Methods) Comparative balance sheet accounts of Sharpe Company are presented below. Additional data:  | | | 1. | Equipment that cost $10,000 and was 60% depreciated was sold in 2014. | | 2. | Cash dividends were declared and paid during the year. | | 3. | Common stock was issued in exchange for land. | | 4. | Investments that cost $35,000 were sold during the year. | | 5. | There were no write-offs of uncollectible accounts during the year. |
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Sharpe's 2014 income statement is as follows. | Sales revenue | | $950,000 | | Less: Cost of goods sold | | 600,000 | | Gross profit | | 350,000 | | Less: Operating expenses (includes depreciation expense and bad debt expense) | | 250,000 | | Income from operations | | 100,000 | | Other revenues and expenses | | | Gain on sale of investments | $15,000 | | Loss on sale of equipment | (3,000) | 12,000 | | Income before taxes | | 112,000 | | Income taxes | | 45,000 | | Net income | | $ 67,000 |
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Instructions | (a) | Compute net cash provided by operating activities under the direct method. |
| (b) | Prepare a statement of cash flows using the indirect method. |
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mgsr9m
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