The income statement for the year ended December 31, 2004, for Tuscany Bay Resort contains the following condensed information.
Included in operating expenses is a $24,000 loss resulting from the sale of guest room furniture for $270,000 cash. Guest room furniture was purchased at a cost of $750,000.
The following balances are reported on Tuscany Bay’s comparative balance sheets at
December 31.
Income tax expense of $353,000 represents the amount paid in 2004. Dividends declared
and paid in 2004 totaled $200,000.
Instructions
(a) Prepare the statement of cash flows using the indirect method.
OR
(b) Prepare the statement of cash flows using the direct method.