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Cashflow - Indirect and Direct Method

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Please help with attached cash flow question.

Income statement
2010 2009

Sales $880,000.00 $801,000.00
Cost of goods sold -$590,000.00 -$490,000.00
Gross profit $290,000.00 $311,000.00

Gain on disposal of assets $5,000.00
Loss on sale of long term investments -$4,000.00
Depreciation expenses -$33,000.00 -$29,000.00
Operating Expenses -$206,000.00 -$232,000.00
Interest Expenses -$10,000.00 -$14,000.00
Income Tax expenses -$18,000.00 -$15,000.00

Net Income $24,000.00 $21,000.00

Balance Sheet
2010 2009

Cash and equivalents $102,000.00 $92,000.00 $10,000.00
Accounts receivable $61,000.00 $65,000.00 -$4,000.00

Inventory $320,000.00 $340,000.00 -$20,000.00
Long-term investments $72,000.00 $100,000.00 -$28,000.00
Property, Plant & Equipment $450,000.00 $263,000.00 $187,000.00
Accumulated depreciation -$93,000.00 -$110,000.00 $17,000.00
$912,000.00 $750,000.00 $162,000.00

Accounts payable $130,000.00 $124,000.00 $6,000.00
Interest payable $10,000.00 $12,000.00 -$2,000.00
Income taxes payable $23,000.00 $8,000.00 $15,000.00
Long-term debt $65,000.00 $20,000.00 $45,000.00
Common shares, no par value $360,000.00 $250,000.00 $110,000.00
Preferred shares, 4%, cumulative, no par value $120,000.00 $150,000.00 -$30,000.00
Retained earnings $204,000.00 $186,000.00 $18,000.00
$912,000.00 $750,000.00 $162,000.00

During 2010, they sold capital assets with a net book value of $51,000 for $56,000.
Instructions:
a. Prepare a cash flow statement for the year ended December 31st, 2010 using the direct approach to report the operating activities.
b. Prepare the operating section using the indirect approach.

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Solution Summary

The solution uses the indirect and direct method to provide the cash flow for the given data.

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Please see the attached file(s) for the complete tutorial.

Income statement
2010 2009

Sales $880,000.00 $801,000.00
Cost of goods sold -$590,000.00 -$490,000.00
Gross profit $290,000.00 $311,000.00

Gain on disposal of assets $5,000.00
Loss on sale of long term investments -$4,000.00
Depreciation expenses -$33,000.00 -$29,000.00
Operating Expenses -$206,000.00 -$232,000.00
Interest ...

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