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Balance sheet data	20X7	20X6
Cash	$2,900	$1,000
Accounts receivable	1,500	1,000
Inventory	7,200	7,000
Property, plant, equipment	9,200	9,000
Accumulated depreciation	(2,900)	(2,500)
Total assets	$17,900	$15,500
Accounts payable	$4,700	$3,500
Interest payable	1,200	1,000
Dividends payable	900	1,500
Long-term debt	4,050	3,700
Bank note	1,000	800
Common stock	3,300	3,000
Retained earnings	2,750	2,000
Total liabilities and equity	$17,900	$15,500
Balance sheet data	20X7	20X6
Cash	$2,900	$1,000
Accounts receivable	1,500	1,000
Inventory	7,200	7,000
Property, plant, equipment	9,200	9,000
Accumulated depreciation	(2,900)	(2,500)
Total assets	$17,900	$15,500
Accounts payable	$4,700	$3,500
Interest payable	1,200	1,000
Dividends payable	900	1,500
Long-term debt	4,050	3,700
Bank note	1,000	800
Common stock	3,300	3,000
Retained earnings	2,750	2,000
Total liabilities and equity	$17,900	$15,500

Income statement for the year 20X7
Sales	$18,500
COGS	11,900
Depreciation	3,000
Interest expense	1,200
Gain on sale of old machine	1,150
Taxes	1,142
Net income	$2,408

Notes:

• Dividends declared to shareholders were $850. New common shares were sold at par for $1020.
• Fixed assets were sold for $3500. Original cost of these assets was $2000, and $350 of accumulated depreciation has been charged to their original cost.The firm borrowed $200 in a 10-year bank note the proceeds of the loan were used to pay for new fixed assets.
• Depreciation for the year was $3000 (accumulated depreciation up $2900 and depreciation on sold assets $100).
• The company uses the LIFO inventory cost flow method. Had FIFO been used, inventories would have been $800 higher in 20X6 and $650 higher in 20X5. The effective tax rate for 20X6 was 30%. For all other years, the effective tax rate was 20%.
• At the beginning of 20X8, A firm issues a $10,000 bond with a 5% coupon rate, 5-year maturity, and annual interest payments when market interest rates are 6%.

1. Assuming US GAAP, calculate cash flow from operations using the indirect method. Pleaseexplain your answer.

2. Assuming US GAAP, use the result in first question to calculate cash flow from operations with the direct method. Please explain your answer by showing each step of calculation.

3. Calculate the current ratio for 20X6 for both LIFO and FIFO inventory cost flow methods. Consider all payables as current liabilities. Please explain each step of your calculation and interpret your results.

4. Please calculate the annual coupon payments, total of all cash payments to the bondholders, and the initial book value of the bond issued in 20X8. Please explain your calculations.
5. Please prepare the amortization table for the first two periods of the bonds life. Please explain your calculations.

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