Question

Cash Flow Statement: The Diversified Portfolio Corp provides investment advice to customers. A statement for the year ended December 31, 2018 is below condensed income Service Revenue Costs of Goods Sold Gross Profit Depreciation Expense Selling and Admin. Expenses Interest Expense Income before income taxes Income Tax Expense Net Income s 22,250 $ 14,250 1,600 6,250 Depreciation expense for the year was $1,600 The following balance sheet information is also available Cash Accounts Receivable Inventory Prepaid Rent Equipment $ 9,600 2,800 2,300 500 14,500 (5,100) 2,400 $3,500 2,400 3,500 200 12,000 (4,500) 2,200 Accounts Payable (used for operating exp and selling/admin) Interest Payable Deferred Service Revenue Income tax payable Note Payable Common Stock Retained Earnings 200 250 500 5,000 10,000 600 800 10,000 3,500 Additional Information Diversified sold a piece of equipment with a book value of $500 for $500 cash. Original cost of the equipment was $1,500 and its accumulated depreciation was $1,000 Dividends of $1,000 were declared and paid. A Note Payable due in 10 years was taken out from the bank during the current year Prepare the Cash Flow Statement (using the Indirect method and the Direct method)

Answer 1