The comparative balance sheets of Mary McGuire Design Studio, Inc., at June 30, 2018, and 2017, and transaction data for fiscal 2018, are as follows:
Transaction data for the year ended June 30, 2018, follows:
a. Net income, $71,000
b. Depreciation expense on equipment, $14,000
c. Purchased a long-term investment with cash, $16,800
d. Sold land for $63,600, including a $7,000 loss
e. Acquired equipment by issuing a long-term note payable, $15,500
f. Paid off a long-term note payable, $58,600
g. Received cash for the issuance of common stock, $500
h. Paid cash dividends, $7,200
i. Paid off a short-term note payable by issuing common stock, $6,100
Requirements
1. Prepare the statement of cash flows of Mary McGuire Design Studio for the year ended June 30, 2018, using the indirect method to report operating activities. Also prepare the accompanying schedule of noncash investing and financing activities. All current account changes except for the short-term Notes Payable changes result from operating transactions.
2. Prepare a supplementary schedule showing cash flows from operations using the direct method. The accounting records provide the following: collections from customers, $260,000; interest received, $1,900; payments to suppliers, $158,600; payments to employees, $40,200; payments for income tax, $12,600; and payment of interest, $4,700.
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