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Edwards Inc. has prepared the following comparative balance sheets
for 2003 and 2004:
2004 2003 Cash $ 198000 $102000
Receivables 106000 78000
Inventory 100000 120000
Prepaid expenses 12000 18000
Plant assets 840000 700000
Accumulated depreciation (300000) (250000)
Patent 102000 116000 $1058000 $884000 Accounts payable $ 102000 $112000
Accrued liabilities 40000 28000
Mortgage payable 300000
Preferred stock 350000
Additional paid-in capital preferred 80000
Common stock 400000 400000
Retained earnings 86000 44000 $1058000 $884000 1. The Accumulated Depreciation account has been credited only for
the depreciation expense for the period. 2. The Retained Earnings account has been charged for dividends of
$92000 and credited for the net income for the year. The income statement for 2004 is as follows: Sales $1320000
Cost of sales 726000 Gross profit 594000
Operating expenses 460000 Net income $ 134000INSTRUCTIONS
(a) From the information above prepare a statement of cash flows
(indirect method) for Edwards Inc. for the year ended
December 31 2004. (b) From the information above prepare a schedule of cash provided
by operating activities using the direct method.

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