Presented below is the comparative balance sheet for Diatessaron Inc., a private company reporting under ASPE, at December 31, 2021, and 2020:

DIATESSARON INC.

Balance Sheet

December 31

Assets 2021 2020

Cash $ 67,000 $ 98,000

Accounts receivable 101,000 75,000

Inventory 205,000 155,500

Long-term investment 101,500 0

Property, plant, and equipment 535,000 460,000

Accumulated depreciation (162,500) (140,000)

$847,000

$648,500

Liabilities and Shareholders' Equity

Accounts payable $57,500 $47,000

Dividends payable 6,000 0

Income tax payable 14,000 15,000

Long-term notes payable 25,000 0

Common shares 630,000 525,000

Retained earnings 114,500 61,500

$847,000

$648,500

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DIATESSARON INC.

Income Statement

Year Ended December 31, 2021

Sales $663,000

Cost of goods sold 432,000

Gross profit 231,000

Operating expenses $147,500

Loss on sale of equipment 3,000 150,500

Profit from operations 80,500

Interest expense 3,000

Interest revenue (4,500) (1,500)

Profit before income tax 82,000

Income tax expense 14,000

Profit $68,000

Additional information:

1. 1.Cash dividends of $15,000 were declared.
2. 2.A long-term investment was acquired for cash at a cost of $101,500.
3. 3.Depreciation expense is included in the operating expenses.
4. 4.The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment.
5. 5.Equipment that originally cost $30,000 was sold during the year for cash. The equipment had a carrying value of $9,000 at the time of sale.
6. 6.The company issued a note payable for $28,000 and repaid $3,000 by year end.
7. 7.All purchases of inventory are on credit.
8. 8.Accounts payable is used only to record purchases of inventory.

Instructions

a.Can you show me a cash flow statement for the year using the indirect method.

b.Can you show me a cash flow statement for the year using the direct method.