Chapter 13, Problem 4PB

Statement of cash flows–direct method

The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows:

The income statement for the year ended December 31, 20Y3, is as follows:

Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:

1. A. Equipment and land were acquired for cash.
2. B. There were no disposals of equipment during the year.
3. C. The investments were sold for $588,000 cash.
4. D. The common stock was issued for cash.
5. E. There was a $528,000 debit to Retained Earnings for cash dividends declared.

Instructions

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.