The financial statements of Oakley Ltd., a private company reporting under ASPE, follow: 

Additional information: 

1. Short-term notes receivable are loans to other companies. During the year, the company collected the balance outstanding at December 31, 2023, and made new loans in the amount of $14,000. 

2. Equipment was sold during the year. This equipment cost $15,000 originally and had a carrying amount of $10,000 at the time of sale. 

3. Equipment costing $10,000 was purchased in exchange for a $10,000 note payable. 

4. Depreciation expense is included in operating expenses. 

5. Accounts receivable are from the sale of merchandise on credit. 

6. Accounts payable relate to the purchase of merchandise on credit. 

Instructions 

a. Prepare a cash flow statement for the year using the indirect method. 

b. Prepare the operating section of the cash flow statement using the direct method.  

Oakley Ltd. had a relatively small change in its cash balance in 2024; cash decreased by only $1,000. Is it still necessary or important to prepare a cash flow statement? Explain.

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Assets Cash Short-term notes receivable Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total assets OAKLEY LTD. Balance Sheet December 31 Liabilities and Shareholders' Equity Accounts payable Income tax payable Notes payable Common shares Retained earnings Total liabilities and shareholders' equity 2024 $ 9,000 14,000 28,000 29,000 73,000 (30,000) $123,000 $ 25,000 3,000 15,000 25,000 55,000 $123,000 2023 $ 10,000 23,000 14,000 25,000 78,000 (24,000) $126,000 $ 43,000 20,000 10,000 25,000 28,000 $126,000