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    Statement of cash flows / Indirect Method and direct method

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    Condensed financial data of Shake It Up Inc. for 2010 and 2009 are presented below.

    Shake It Up Inc.
    Comparative Balance Sheet
    As of December 31, 2010 and 2009
    2010 2009
    Cash $ 1,790 $ 1,165
    Receivables 1,712 1,288
    Inventory 1,621 1,912
    Plant assets 1,880 1,675
    Accumulated depreciation (1,180) (1,130)
    Long-term investments (Held-to-maturity) 1,360 1,460
    $ 7,183 $ 6,370
    Accounts payable $ 1,182 $ 990
    Accrued liabilities 200 240
    Bonds payable 1,410 1,575
    Capital stock 1,895 1,665
    Retained earnings 2,496 1,900
    $ 7,183 $ 6,370
    Shake It Up Inc.
    Income Statement
    For the Year Ended December 31, 2010
    Sales $ 6,850
    Cost of goods sold 4,565
    Gross margin 2,285
    Selling and administrative expenses 925
    Income from operations 1,360
    Other revenues and gains
    Gain on sale of investments 85
    Income before tax 1,445
    Income tax expense 578
    Net income 867
    Cash dividends 271
    Income retained in business $ 596

    Additional information:

    During the year, $71 of common stock was issued in exchange for plant assets. No plant assets were
    sold in 2010.

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    Solution Summary

    The statement of cash flows for indirect and direction methods are examined.

    $2.19