The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2016, appears below:
Service revenue $ 1,240,000
Operating expenses 870,000
Income before income taxes 370,000
Income tax expense 74,000
Net income $ 296,000
The following balance sheet information also is available:
12/31/16 12/31/15
Cash $ 475,000 $ 60,000
Accounts receivable 154,000 117,000
Accounts payable (operating expenses) 104,000 77,000
Income taxes payable 27,000 49,000
In addition, the following transactions took place during the year:
1. Common stock was issued for $134,000 in cash.
2. Long-term investments were sold for $67,000 in cash. The original cost of the investments also was $67,000.
3. $97,000 in cash dividends was paid to shareholders.
4. The company has no outstanding debt, other than those payables listed above.
5. Operating expenses include $47,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2016 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.)
2. Prepare the cash flows from operating activities section of Diversified's 2016 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)