Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 57

Direct and Indirect Methods
The following balance sheets and income statement were taken from the records of Rosie-Lee Company:

Refer to the information for Rosie-Lee Company above. Additional transactions were as follows:
a. Sold equipment costing $21,600 with accumulated depreciation of $16,200 for $3,600.
b. Issued bonds for $90,000 on December 31.
c. Paid cash dividends of $36,000.
d. Retired mortgage of $108,000 on December 31.
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.