Sellmer’s Pasta has the following financial statements: 

At the end of 2020, Sellmer purchased additional equipment for $24,625. Sellmer paid dividends of $5,000 during the year. 

Required 

a. Prepare a statement of cash flows for 2020 using the direct method. Assume that advertising is paid in cash. 

b. Prepare the operating activities section of the statement of cash flows for 2020 using the indirect method. Note that there is no difference between the two methods for the investing and financing sections.

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Sellmer's Pasta Balance Sheets As of December 31, 2019, and 2020 2020 2019 Assets Cash $280,900 $263,000 Accounts receivable 120,500 118,000 Inventory Prepaid expenses Plant and equipment Accumulated depreciation 83,800 94,200 199,080 183,800 80,325 55,700 (15,500) (12,900) Total assets $749,105 $701,800 Liabilities and Equity Accounts payable Accrued wages Long-term notes payable $234,100 $235,200 32,800 29,200 156,405 175,400 Common stock 72,500 72,500 Retained earnings 253,300 189,500 Total liabilities and equity $749,105 $701,800