Question: Refer to the data in QS.

1. Assume that all common stock is issued for cash. What amount of cash dividends is paid during 2011?

2. Assume that no additional notes payable are issued in 2011. What cash amount is paid to reduce the notes payable balance in 2011?

QS: Use the indirect method to prepare the cash provided or used from operating activities section only of the statement of cash flows for this company.

ORWELL, INC.

Income Statement

For Year Ended December 31, 2011

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . $468,000

Cost of goods sold . . . . . . . . . . . . . . 312,000

Gross profit . . . . . . . . . . . . . . . . . . . . 156,000

Operating expenses

Depreciation expense . . . . . . . . . $38,600

Other expenses . . . . . . . . . . . . . . 57,000 95,600

Income before taxes . . . . . . . . . . . . . 60,400

Income taxes expense . . . . . . . . . . . 24,600

Net income . . . . . . . . . . . . . . . . . . . . $ 35,800