Data from Jensen's 2008 Balance Sheet and Income statement and statement of comprehensive income follow:

Additional data:

1. Equipment that cost $10,000 and was 40% amortized was sold in 2008.
2. Cash dividends were declared and paid during the year.
3. Common shares were issued in exchange for land.
4. Investments that cost $35,000 and had a fair value of $37,000 at December 31, 2007 were sold during the year.
5. Cost of goods sold includes $115,000 of direct labour and benefits and $11,700 of pension costs. Operating expenses include $76,000 of wages and $8,000 of pension expense.

Questions
1. Prepare the "cash provided by (used in) operations" section of the statement of cash flows, assuming the indirect method is used an all necessary information is provided
2. Identify the amounts that would be reported within this section if the direct method were used for the following items:
a. Cash paid to and on behalf of employees.
b. Cash received from customers.
c. Income taxes paid.
d. Cash paid to suppliers for goods and services.
e. Interest paid.
3. Prepare a statement of cash flows using the indirect method, including all required disclosures.
4. Prepare the "cash provided by (used in) operating activities" section under the direct method.
5. Comment on the company's cash activities during the year.
6. Assume that you are a shareholder of Jensen Limited. What do you think of the dividend payout ratio that is highlighted in the statement of cash flows? Do you see any reasons that would help explain Jensen's dividend policy? If yes, what arethey?

JENSEN LIMITED Balance Sheet Accounts December 31, 2008 and 2007 Debit balances 2007 80,000 51,000 138,500 119,000 75,000 61,000 59,000 80,000 6,500 11,000 70.000 48.000 145,000 145,000 40.000 25.000 614,000 540.000 2008 Cash Accounts receivable Merchandise Inventory Long-term investments (available for sale) Future Income tax asset Equipment Building an Credit balances Allowance for Doubtful accounts Accumulated amortization equipment Accumulated amortization building Accounts payable Income taxes payable Long-term notes payable Accrued pension liability Common shares Retained eamings 10,0008,000 21.00014,000 37,000 28,000 72,000 60,000 12,000 10,000 62,000 70,000 7,500 10,000 300,000 250,000 88.00095,000 Accumulated other comprehensive income loss)4,000 5,000 613.500 540.000 Sales Less: Cost of goods sold 950,000 600.000 Gross profit Less: Operating expenses (inchudes amortization and 350,000 250,000 bad debt expense) Income from operations Other revenues and expenses 00.000 Gain on sale of investments (AFS) Loss on sale of equipment 15,000 3.000 12.000 Income before taxes 112,000 45.000 Income taxes Net income Other comprehensive income 67.000 Holding gain on AFS investments during year Reclassification adjustment for gains included 24.000 15.000 9.000 76,000 n net income Comprehensive income