Data for Arma Ltd. Are presented in PA. Further analysis reveals that accounts payable pertain to merchandise creditors.

Instructions
Prepare a statement of cash flows for Arma Ltd. Using the directmethod.

ARMA LTD Comparative Statements of Financial Position December 31 Assets Plant assets Accumulated depreciation Investments Prepaid expenses Inventories Accounts receivable Cash 2011 270,000 (50.000) 138.000 28.400 112.500 92.800 90.800 2010 $242.500 (52.000) 1 14.000 26.000 02.850 33.000 48.400 $514.750 Total $682.500 Equity and Liabilities Share capitalordinary Retained carnings Bonds payable Accounts payable Accrued expenses payable 220.000 224.000 10.000 2.000 16.500 682.500 $175.000 105.450 150.000 67.300 17.000 $514.750 Total ARMA LTD. Income Statement For the Year Ended December 31, 2011 392.780 Sales Less: Cost of goods sold Operating expenses. excluding S135.460 depreciation Depreciation expense Income taxes Interest expense Loss on sale of plant assets 2.410 46.500 27.280 4.730 7.500 233.880 $158,900 Net income