The comparative balance sheets and income statement of Piura Manufacturing follow.

Piura ManufacturingComparative Balance SheetsFor the Years Ended June 30, 2022, and 2023

Assets
	2022	2023
Cash	$ 72,000.00	$ 146,400.00
Accounts Receivable	44,000.00	48,000.00
Inventory	64,000.00	44,000.00
Plant & Equipment	104,000.00	112,000.00
Accumulated Depreciation	(52,000.00)	(48,000.00)
Land	20,000.00	20,000.00
Total Assets	252,000.00	322,400.00
Liabilities and Equity
Accounts Payable	32,000.00	48,000.00
Wages Payable	4,000.00	2,400.00
Bonds Payable	24,000.00	16,000.00
Preferred Stock (no par)	4,000.00	12,000.00
Common Stock	30,000.00	36,000.00
Paid-in-Capital in Excess of Par	50,000.00	76,000.00
Retained Earnings	108,000.00	132,000.00
Total Liabilities and Equity	252,000.00	322,400.00

Piura ManufacturingIncome StatementFor the Year Ended June 30, 2023

Sales	$ 320,000.00
Cost of Goods Sold	200,000.00
Gross Margin	120,000.00
Operating Expenses	88,000.00
Net Income	32,000.00

Additional transactions for 20X2 were as follows:

• Cash dividends of $8,000 were paid.
• Equipment was acquired by issuing common stock with a par value of $6,000. The fair market value of the equipment is $32,000.
• Equipment with a book value of $12,000 was sold for $6,000. The original cost of the equipment was $24,000. The loss is included in operating expenses.
• Two thousand shares of preferred stock were sold for $4 per share.

Required:

1. Prepare a schedule of operating cash flows using (a) the indirect method and (b) the direct method.
2. Prepare a statement of cash flows using the indirect method.
3. Prepare a statement of cash flows using a worksheet similar to the one shown in Example 14.8.
4. Discuss the merits of the direct and indirect methods. Which do you think investors might prefer? Should the FASB require all companies to use the direct method?