cash flow

Project Description:

the diversied portfolio corp. provides investment advice to customer. a condensed income statement for the year ended in december 31,2009, appear below

service revenue $900,000
operating expenses $700,000
income before income taxes $200,000
income tax expenses $ 80,000
net income $120,000

the following balance sheet information also is available:
12/31/09 12/31/08
cash $275,000 $ 70,000
accounts receivables $120,000 $100,000
account payable $ 70,000 $ 60,000
income taxes payable $ 10,000 $ 15,000

in addition, the following transactions took place during the year:
1. common stock was issued for $10,000 in cash.
2. lorn term investments were sold for %50,000 in cash. the original cost of the investments also was $50,000.
3. $80,000 in cash dividends was paid to the shareholders.
4 the company has no outstanding debt, other than those payables listed above.
5. operating expenses operating expenses include $40,000 in depreciation expenses.

a)prepare a statement of cash flow for 2009 for diversified portfolio corporation. use the direct method for reporting operating activities.

b)prepare the cash flow from operating activities section of diversified's 2009 statement of cash flow using the indirect method
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