Texts: The income statement and additional data of Newbury Products, Inc., follow:
Newbury Products, Inc.
Income Statement
Year Ended December 31, 2016
Sales revenue
283,000
COGS
(103,000)
Gross margin
180,000
Depreciation expense
(26,000)
Salary expense
(78,000)
Advertising expense
(4,500)
Operating income
71,500
Dividend revenue
8,000
Interest expense
(2,600)
Income before tax
76,900
Income tax expense
(8,000)
Net income
68,900
Additional data:
a. Acquisition of PPE was $212,000. Of this amount, $160,000 was paid in cash and $52,000 by signing a note payable.
b. Proceeds from sale of land totaled $27,000.
c. Proceeds from issuance of shares totaled $80,000.
d. Payment of long-term note payable was $17,000.
e. Payment of dividends was $13,000.
f. From the balance sheets:
December 31
2016
2015
Current Assets:
Cash
$30,600
$10,800
Accounts receivable
42,000
59,000
Inventory
30,000
91,000
Prepaid expenses
9,400
8,700
Current Liabilities:
Accounts payable
$38,000
$27,000
Accrued liabilities
18,000
99,000
Interest payable
600
Required:
1. Prepare Newbury's statement of cash flows for the year ended December 31, 2016, using the indirect method (for OCF).
2. Prepare Newbury's statement of cash flows for the year ended December 31, 2016, using the direct method (for OCF)