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PS#2 is an exercise with the Statement of Cash Flows. Using the illustrations below, please complete the cash flows from operating activities section (ONLY) for Summer Corporation. You should complete the operating activities section using BOTH the indirect and direct methods (ignore requirements shown in pics below) Students should assume that accounts payable was used only for the purchase of merchandise inventory. Additionally, no accruals were recorded at year end for other operating expenses. STATEMENT OF CASH FLOWS - INDIRECT METHOD Based on the following income statement and balance sheet for Summer Corporation, determine the cash flows from operating activities using the indirect method. Using your answers for the indirect method of determining operating cash flows, answer questions 18-21 that follow. Summer Corporation Income Statement For Year Ended December 31, 20X2 Sales $504,000 Cost of goods sold $327,600 Depreciation expense 33.000 Other operating expenses - 125.500 (486,100) Other gains (losses): Gain on sale of equipment 5.200 Income before taxes 23,100 Income tax expense Net income (4.800) $ 18,300 Summer Corporation Balance Sheets At December 31 Assets 20X2 20X1 Cash Accounts receivable Inventory Equipment Accumulated depreciation Total assets $ 62,650 21,000 58,000 240.000 (97.000) $284,650 55,800 29,000 52,100 222,000 ( 96,000) $262.900 $ 28,400 1,050 29,450 $ 23,700 1.200 24,900 Liabilities: Accounts payable Income taxes payable Total liabilities Equity: Common stock Paid-in Capital in excess of par value Retained earnings Total equity Total liabilities and equity 106,000 18,000 131.200 255,200 $284,650 106.000 18.000 114.000 238.000 $262.900 Students may utilize and are encouraged to utilize the exhibits shown in class for both the indirect and direct methods

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