Kenji International, Inc.€™s income statement and comparative balance sheets appear as follows:

Additional information related to business activities during 2014:
1. All accounts payable pertain to inventory purchases, and accrued liabilities pertain to other operating expenses.
2. The original cost of the equipment sold was $38,000. New equipment was purchased by issuing a 6%, $100,000, 5-year long-term note payable as a partial payment.
Requirements
1. Identify source and use of cash for each account in the Balance Sheet.
2. Calculate the cash receipt from the sale of equipment and the cost of the new equipment, using T-accounts to show your calculations.
3. Prepare a cash flow statement, using the indirect method.
4. Prepare the cash flow from operating activities section by using the direct method.

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Kenji International, Inc Income Statement For the Year Ended December 31, 2014 Sales Revenue Cost of Goods Sold $160,000 (64,000 96,000 $14,500 48,500 2,400 35,200 Depreciation ExpenseEquipment Salaries Expense Bad Debt Expense Other Operating Expenses Interest Expense Operating Income (Loss) Gain on Sale of Equipment Net Loss 6,000 106,600 (10,600) 3,500 7.100 Kenji International, Inc Balance Sheet As of December 31 SOURCE/ USE 2014 2013 $ 2,800 4,800 12,800 Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Expenses Equipment Accumulated Depreciation Total 26,000 (3,600) (1,200) 24,500 27,800 2,100 85,000 42,500 $88,80 4,800 167,000 37,500 184,000 10,400 4,000 3,500 Accounts Payable Salaries Payable Interest Payable Long-Term Note Payable Common Shares Retained Earnings Total 6,400 2,000 100,000 50,000 50,000 23,200 $184,000 $88,800 16,100