P238. SCF—Direct and Indirect Methods)(368Comparative balance sheet accounts of Sharpe Company are presented below.Additional data:1. Equipment that cost $10 000 and was 60% depreciated was sold in 2014.2. Cash dividends were declared and paid during the year.3. Common stock was issued in exchange for land.4. Investments that cost $35 000 were sold during the year.5. There were no writeoffs of uncollectible accounts during the year.Sharpe’s 2014 income statement is as follows.Sales revenueLess: Cost of goods soldGross profitLess: Operating expenses (includes depreciation expense and bad debtexpense)Income from operationsOther revenues and expensesGain on sale of investments$950 000600 000350 000250 000$15 000100 000 Loss on sale of equipment(3 000)12 000Income before taxes112 000Income taxes45 000Net income$ 67 000Instructions(a) Compute net cash provided by operating activities under the direct method.(b) Prepare a statement of cash flows using the indirect method.
