The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2016, appears below:
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Service revenue
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$
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960,000
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Operating expenses
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730,000
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Income before income taxes
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230,000
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Income tax expense
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46,000
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Net income
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$
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184,000
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The following balance sheet information also is available:
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12/31/16
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12/31/15
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Cash
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$
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348,000
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$
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73,000
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Accounts receivable
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126,000
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103,000
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Accounts payable (operating expenses)
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76,000
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63,000
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Income taxes payable
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13,000
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21,000
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In addition, the following transactions took place during the year:
1. Common stock was issued for $106,000 in cash.
2. Long-term investments were sold for $53,000 in cash. The original cost of the investments also was $53,000.
3. $83,000 in cash dividends was paid to shareholders.
4. The company has no outstanding debt, other than those payables listed above.
5. Operating expenses include $33,000 in depreciation expense.
Required:
1. Prepare a statement of cash flows for 2016 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.)
2. Prepare the cash flows from operating activities section of Diversified's 2016 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)