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Cash flows from operating activities (direct method and indirect method)-deferred income tax liability and amortization of bond discount Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2011 ($ in 000s) Sales $ 800 Cost of goods sold (300) Gross margin Salaries expense Insurance expense Depreciation expense Interest expense 500 $120 40 123 50 (333) Gains and losses: Gain on sale of buildings Loss on sale of machinery 11 (12) Income before tax 166 Income tax expense (78) Net income $ 88 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2011 and 2010 (S in 000s)