Mill Bay Inc.'s comparative balance sheet at September 30, 2014, and its 2014 income statement are shown below.

Other information for the year ended September 30, 2014:
a. Acquired equipment by issuing long-term note payable, $89,200, and paying $16,000 cash.
b. Paid long-term note payable, $122,800.
c. Received $207,600 cash for issuance of common shares.
d. Paid cash dividends, $217,200.
e. Acquired equipment by issuing short-term note payable, $40,000.
Required
1. Prepare Mill Bay Inc.'s cash flow statement for the year ended September 30, 2014, using the direct method to report operating activities. Also prepare a note to the financial statements giving a summary of noncash investing and financing activities. All current accounts, except short-term notes payable, result from operating transactions.
2. Prepare a supplementary schedule showing the cash flows from operating activities using the indirect method.

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MILL BAY INC Balance Sheet September 30, 2014 and 2013 2014 201 Current assets Cash Accounts receivable Interest receivable Inventories Prepaid expenses $ 194,800 167,600 16,400 486,800 34,400 204,400 527,600 188,400 $1,820,400 $ 96,400 164,000 11,200 467,600 37,200 55,200 416,400 297,200 $1,545,200 Long-term investments Plant and equipment, net Land Current liabilities Notes payable, short-term Accounts payable Income tax payable Accrued liabilities $ 40,000 247,200 47,200 71,600 281,200 46,400 116,400 MILL BAY INC Balance Sheet September 30, 2014 and 2013 2014 2013 $ 18,000 6,000 492,000 543,600 354,800 $1,820400 $ 12,800 4,400 525,600 336,000 222,400 $1,545,200 Interest payable Salaries ble paya Long-term note payable Common shares Retained earnings MILL BAY INC Income Statement For the Year Ended September 30, 2014 Sales revenue Cost of Gross margin Operating expenses: $1,468,400 646,000 822,400 goods sold Amortization Salaries Other $34,000 253,600 118400 406,000 416,400 Operating income Other revenues and expenses: Revenues and gains: Interest Gain on sale of land 29,200 43,600 Interest expense Income before income taxes Income tax expense Net income 489,200 54,000 435,200 85,600 $349,600