Marchant Ltd. reported the following abbreviated statement of financial position and statement of earnings for 2016.

Required:
a. Prepare a statement of cash flows for Marchant Ltd. for the year ended December 31, 2016, using the indirect method.
b. Determine the cash flows from operating activities using the direct method.
c. Was the cash flow generated by the company€™s operating activities during the year larger or smaller than the net income? Should these two amounts be the same? Explain.
d. Was the change in the amount of working capital during the year the same amount as cash from operating activities? Should these two amounts be the same? Explain. (Hint: Working capital 5 current assets 2 current liabilities.)

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MARCHANT LTD Comparative Statement of Financial Position Dec. 31, 2016 Dec. 31, 2015 Cash Accounts receivable Inventory Property, plant, and equipment Less: Accumulated depreciation $ 60,000 120,000 320,000 700,000 (260,000) $940,000 $ 70,000 140,000 280,000 650,000 (230,000) S 910,000 Total assets Accounts payable Wages payable Loan payable Common shares Retained earnings $82,000 8,000 350,000 200,000 00,000 940,000 S 85,000 10,000 400,000 150,000 265,000 10,000 Total liabilities and shareholders' equity S 9 MARCHANT LTD Statement of Income For the vear ended December 31, 2016 Sales Cost of goods sold Gross profit Other expenses $450,000 240,000 210,000 Supplies expense Depreciation expense Wages expense Other operating expenses Interest expense 15,000 30,000 100,000 5,000 24,000 174,000 36,000 8,000 44,000 Other income Net income