Prepare cash flow statements$$indirect method and direct method.

P$17\mathrm{.}10$A $($LO $2,3)$ AP The financial statements of Oakley Ltd$.,$ a private company reporting under ASPE, follow:

OAKLEY LTD$.$

Balance Sheet

December $31$

Assets

$2024$

$2023$

Cash

$$9,000$

$$10,000$

Short$-$term notes receivable

$14,000$

$23,000$

Accounts receivable

$28,000$

$14,000$

Inventory

$29,000$

$25,000$

Property, plant, and equipment

$73,000$

$78,000$

Accumulated depreciation

$(30,000)$

$(24,000)$

$$Total assets

$$123,000$

$$126,000$

Liabilities and Shareholders$$ Equity

Accounts payable

$$25,000$

$$43,000$

Income tax payable

$3,000$

$20,000$

Notes payable

$15,000$

$10,000$

Common shares

$25,000$

$25,000$

Retained earnings

$55,000$

$28,000$

$$Total liabilities and shareholders$$ equity

$$123,000$

$$126,000$

OAKLEY LTD$.$

Income Statement

Year Ended December $31,2024$

Sales

$$286,000$

Cost of goods sold

$194,000$

Gross profit

$92,000$

Operating expenses

$$38,000$

Loss on sale of equipment

$2,000$

$40,000$

Profit from operations

$52,000$

Other revenues and expenses

$$Interest revenue

$(1,000)$

$$Interest expense

$2,000$

$1,000$

Profit before income tax

$51,000$

Income tax expense

$15,000$

Profit for the year

$$36,000$

Additional information:

Short$-$term notes receivable are loans to other companies. During the year, the company collected the balance outstanding at December $31,2023,$ and made new loans in the amount of $$14,000.$

Equipment was sold during the year. This equipment cost $$15,000$ originally and had a carrying amount of $$10,000$ at the time of sale.

Equipment costing $$10,000$ was purchased in exchange for a $$10,000$ note payable.

Depreciation expense is included in operating expenses.

Accounts receivable are from the sale of merchandise on credit.

Accounts payable relate to the purchase of merchandise on credit.

Instructions

Prepare a cash flow statement for the year using the indirect method.

Prepare the operating section of the cash flow statement using the direct m