Comparative statement of financial position accounts of Marcus AG are presented below.

Additional data (ignoring taxes):

1. Net income for the year was €42,500.

2. Cash dividends declared and paid during the year were €21,125.

3. A 20% share dividend was declared during the year. €25,000 of retained earnings was capitalized.

4. Equity investments that cost €25,000 were sold during the year for €28,750.

5. Machinery that cost €3,750, on which €750 of depreciation had accumulated, was sold for €2,200. Marcus’s 2022 income statement follows (ignoring taxes).

Instructions

a. Compute net cash flow from operating activities using the direct method.

b. Prepare a statement of cash flows using the indirect method.

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Marcus AG Comparative Statement of Financial Position Accounts As of December 31, 2022 and 2021 December 31 Debit Accounts 2022 2021 Cash € 42,000 € 33.750 Accounts Receivable 70,500 60,000 Inventory 30,000 24,000 Equity Investments (non-trading) 22,250 38,500 Machinery 30,000 18,750 Buildings 67,500 56,250 Land 7,500 €269,750 €238,750 7.500 Credit Accounts Allowance for Doubtful Accounts € 2,250 € 1,500 5,625 Accumulated Depreciation-Machinery 2,250 Accumulated Depreciation-Buildings 13,500 9,000 Accounts Payable 35,000 24,750 Accrued Payables 3:375 2,625 Long-Term Notes Payable 21,000 31,000 Share Capital-Ordinary, no par 150,000 125,000 Retained Earnings 39,000 42,625 €269,750 €238,750