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.

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