Higley Inc.$$s Comparative Balance Sheets for $2023$ and $2022$ and Income Statement for $2023$ are presented below.

Higley Inc.

Comparative Balance Sheets

December $31,2023$ and $2022$

Assets $20232022$

Cash $ $84,000$ $ $67,500$

Accounts Receivable $141,000120,000$

Allowance for Doubtful Accounts $(4,500)(3,000)$

Inventory $60,00048,000$

Equity Investments $44,50077,000$

Equipment $60,00037,500$

Accumulated Depreciation $$ Equipment $(11,250)(4,500)$

Buildings $135,000112,500$

Accumulated Depreciation $$ Buildings $(27,000)(18,000)$

Land $15,00015,000$

Total Assets $$496,750$ $$452,000$

Liabilities

Accounts Payable $ $70,000$ $ $49,500$

Accrued Payables $6,7505,250$

Long$-$Term Notes Payable $42,00062,000$

Total Liabilities $$118,750$ $$116,750$

Stockholders$$ Equity

Common Stock $$300,000$ $$250,000$

Retained Earnings $78,00085,250$

Total Stockholders$$ Equity $$378,000$ $$335,250$

Totals Liabilities and Stockholders$$ Equity $$496,750$ $$452,000$

Higley Inc.

Income Statement

For Year Ended December $31,2023$

Sales Revenue $$1,080,000$

Less: Cost of Goods Sold $760,000$

Gross Profit $$320,000$

Less: Operating Expenses$*240,900$

Income from Operations $ $79,100$

Other Revenues and Expenses:

Gain on Sale of Equity Investments $ $7,500$

Loss on Sale of Equipment $(1,600)5,900$

Net Income $ $85,000$

$*$Operating Expenses include Depreciation Expense and Bad

Debt Expense.

Additional information from the accounting records:

$1.$ Equipment that cost $$7,500$ on which $$1,500$ of depreciation had accumulated was sold during $2023.$

$2.$ A $20\%$ stock dividend was declared during the year and $$50,00$ of retained earnings was capitalized.

$3.$ Cash dividends were declared and paid during the year.

$4.$ Equity investments that cost $$50,000$ were sold during the year.

$5.$ Accounts Receivable of $$9,300$ were written off as uncollectible during $2023.$

Instructions:

a$.$ Prepare a complete Statement of Cash Flows using the direct method.

b$.$ Reconcile net income to cash $($Operating section of a Statement of Cash Flows using the indirect method$).$