Condensed financial data follow for Galenti Inc. Galenti is a private company reporting under ASPE. Additional information: 1. Short-term investments (reported at cost) were sold for $15,000, resulting in a loss of $7,500. Investments were also purchased during the year. 2. New equipment costing $141,000 was purchased for $71,000 cash and a $70,000 note payable. 3. Equipment with an original

Condensed financial data follow for Galenti Inc. Galenti is a private company reporting under ASPE.
Condensed financial data follow for Galenti Inc. Galenti is a
Condensed financial data follow for Galenti Inc. Galenti is a

Additional information:
1. Short-term investments (reported at cost) were sold for $15,000, resulting in a loss of $7,500. Investments were also purchased during the year.
2. New equipment costing $141,000 was purchased for $71,000 cash and a $70,000 note payable.
3. Equipment with an original cost of $56,000 was sold, resulting in a gain of $8,750.
4. Notes payable that matured during the year were paid in cash.
5. Accounts Payable is used for merchandise purchases.
6. Prepaid expenses and accrued expenses payable relate to operating expenses.
7. Accounts receivable relate to merchandise sales.
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.
TAKING IT FURTHER
Galenti had a large cash balance (of $102,700) at December 31, 2017. What recommendations with respect to cash management might you make to Galenti's management? Explain.

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