John Kosinski

John Kosinski Manufacturing Company

Statement of Cash flow-indirect method

Year Ending December 31, 2005

Cash Flow from operating activities Debit Credit

Net income $430,000

Adjustments to reconcile net income to net cash

Provided by operating activities:

Depreciation expense $880,000

Loss on sale of Machinery 24,000

Increase in accounts receivable (165,000)

Decrease in inventories 33,000

Increase in accounts payable 20,000 792,000

Net cash provided by operating activities 1,222,000

Cash flows from investing activities

Sale of machinery 270,000

Purchase of machinery (750,000)

Net cash used by investing activities (480,000)

Cash flows from financing activities

Payment of cash dividends (200,000)

Net increase in cash 542,000

Cash at beginning of period 130,000

Cash at end of period $672,000

John Kosinski Manufacturing Company

Statement of Cash Flow – Direct Method

Year Ended December 31, 2006

Cash flows from operating activities

Cash receipts from customers $6,418,000

Cash payments:

For operating expenses $4,843,000

For income taxes 353,000 5,196,000

Net cash provided by operating activities 1,222,000

Cash flows from investing activities

Sale of machinery 270,000

Purchase of machinery (750,000)

Net cash used by investing activities (480,000)

Cash flows from financing activities

Payment of cash dividends (200,000)

Net increase in cash 542,000

Cash at beginning of period 130,000

Cash at end of period $672,000

Direct Method Computations:

*Computation of cash receipts from customers:

Revenues per the income statement $6,583,000

Less increase in accounts receivable 165,000

Cash receipts from customers $6,418,000

**Computation of cash payments...