Prepare a statement of cash flows

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Reference no: EM13840844

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2016, appears below:




  Service revenue



  Operating expenses




  Income before income taxes



  Income tax expense




  Net income




The following balance sheet information also is available:









  Accounts receivable





  Accounts payable (operating expenses)





  Income taxes payable





In addition, the following transactions took place during the year:

1. Common stock was issued for $106,000 in cash.

2. Long-term investments were sold for $53,000 in cash. The original cost of the investments also was $53,000.

3. $83,000 in cash dividends was paid to shareholders.

4. The company has no outstanding debt, other than those payables listed above.

5. Operating expenses include $33,000 in depreciation expense.


1. Prepare a statement of cash flows for 2016 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.)

2. Prepare the cash flows from operating activities section of Diversified's 2016 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Reference no: EM13840844

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