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P12-7B. Statement of Cash Flows (Direct Method) Refer to the data given for the Lowe Company in Prob- lem P12-2B. Required a. Compute the change in cash the occurred during 2019. b. Prepare a statement of cash flows using the direct method. P12-2B. Statement of Cash Flows (Indirect Method) The Lowe Company's income statement and com- parative balance sheets as of December 31 of 2019 and 2018 are presented below: LOWE COMPANY Income Statement For the Year Ended December 31, 2019 $925,000 Sales revenue. Cost of goods sold...... Wages expense.... Depreciation expense....... . Insurance expense........ Interest expense......... Income tax expense........... Gain on sale of equipment Net income.... $490,000 207,000 62.000 17,000 12,000 57,000 (16,000) 829,000 $ 96,000 LOWE COMPANY Balance Sheets Dec. 31, 2019 Dec. 31, 2018 Assets Cash... Accounts receivable... Inventory............. Prepaid insurance. .. . Plant assets Accumulated depreciation. Total assets .... $ 25,000 68,000 177,000 8,000 887,000 (191.000) $974,000 $ 33,000 51,000 126,000 11,000 763,000 (175,000) $809,000 Chapter 12 S M mbridge Business Publishers continued from previous page LOWE COMPANY Balance Sheets Dec. 31, 2019 Dec. 31, 2018 $ 27,000 Liabilities and Stockholders' Equity Accounts payable....... Interest payable ............. Income tax payable ............ Bonds payable ......... Common stock ..... Retained earnings .................... Treasury stock ......... Total liabilities and stockholders' equity ...... $ 37,000 7,000 11,000 145,000 660,000 166,000 (52,000) $974,000 19,000 80,000 585,000 98,000 $809,000 During the year, Lowe Company sold equipment for $27.000 cash that originally cost $57,000 and had $46,000 accumulated depreciation. New equipment was purchased for cash. Bonds payable and common stock were issued for cash. Cash dividends of $28,000 were declared and paid. At the end of the year, shares of treasury stock were purchased for cash. Accounts payable relate to merchandise purchases. Required Exercise 12-7B (a) (b)

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