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

$

960,000   

  Operating expenses

 

730,000   

 



  Income before income taxes

 

230,000   

  Income tax expense

 

46,000   

 



  Net income

$

184,000   

 



The following balance sheet information also is available:

 

12/31/16

12/31/15

  Cash

$

348,000   

$

73,000   

  Accounts receivable

 

126,000   

 

103,000   

  Accounts payable (operating expenses)

 

76,000   

 

63,000   

  Income taxes payable

 

13,000   

 

21,000   

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.

Required:

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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