The statement of income of Morin Cycle Co. for the year ended December 31, 2015, is as follows:

Instructions
1. Using the information from Problem 16-3A and the additional information provided, prepare a statement of cash flows using the direct method of presenting cash flows from operating activities.
2. How does Morin's cash flow compare to its net income? Summarize the changes that caused the difference.

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Sales .. Cost of goods sold $460,500 345,375 Gross profit .. Operating expenses: Depreciation expense Other operating expenses. Total operating expenses Operating loss... Other expense: Loss on sale of land 115,125 $24,500 97.425 121.925 (6,800) (7 ,400) Loss before income taxes Income taxes expense (14,200) Net loss.. $ (14.200)