Reference no: EM13518184

Comparative balance sheets and the income statements for Ellis Company are presented below:

Ellis Company

Balance Sheets

December 31, Year 1 and Year 2

	Year 2	Year 1
Assets
Current assets:
Cash	$ 45,000	$ 30,000
Accounts receivable	38,000	40,000
Inventory	67,000	60,000
Total current assets	150,000	130,000
Long-term investments	162,000	200,000
Plant and equipment	278,000	150,000
Accumulated depreciation	(52,000)	(50,000)
Total assets	$538,000	$430,000

Liabilities and stockholders' equity

Current liabilities:	$ 36,000	$ 40,000
Accrued liabilities	24,000	30,000
Total current liabilities	60,000	70,000
Bonds payable	20,000	30,000
Mortgage payable	100,000
Deferred income taxes	15,000	20,000
Total liabilities	195,000	120,000
Stockholders' equity:
Common stock	295,000	270,000
Retained earnings	48,000	40,000
Total stockholders' equity	343,000	310,000
Total liabilities and stockholders' equity	$538,000	$ 430,000

Ellis Company

Income Statement

For the Year Ended December 31, Year 2

Sales	$150,000
Less cost of goods sold	76,500
Gross margin	73,500
Less operating expenses	16,000
Net operating income	57,500
Less loss on sale of investment	2,500
Income before taxes	55,000
Less income taxes	22,000
Net income	$ 33,000

Summary of transactions for Year2:

* During Year 2, the company sold for cash of $35,500 long-term investments with a cost of $38,000 when purchased.

* All sales were on credit.

* The company paid a cash dividend of $25,000.

* Bonds payable of $25,000 were retired by issuing common stock. The bonds retired were equivalent to the market value of the $25,000 stock issued.

* An addition to one of the company's buildings was completed on December 31, Year 2, at a cost of $128,000. The company gave an interest-bearing mortgage for $100,000 and paid $28,000 in cash.

* Bonds payable were sold for $15,000 cash at par value.

Required:

a. Using the indirect method, determine the net cash provided by operating activities for Year 2.

b. Using the direct method, determine the net cash provided by operating activities for Year 2.

c. Using the net cash provided by operating activities figure from either part a or b, prepare a statement of cash flows for Year 2.