The Diversified Portfolio Corporation provides investment advice to customers. A

Question

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2018, appears below Service revenue Operating expenses Income before income taxes Income tax expense Net income $960,000 730,000 230,000 46,000 $184,006e The following balance sheet information also is available Cash Accounts receivable Accounts payable (operating expenses) Income taxes payable 12/31/18 12/31/17 $ 348,000 73,000 103,000 63,000 21,000 126,000 76,000 13,000 In addition, the following transactions took place during the year: 1. Common stock was issued for $106,000 in cash 2. Long-term investments were sold for $53,000 in cash. The original cost of the investments also was $53,000 3. $83,000 in cash dividends was paid to shareholders 4. The company has no outstanding debt, other than those payables listed above 5. Operating expenses include $33,000 in depreciation expense Required: 1. Prepare a statement of cash flows for 2018 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities 2. Prepare the cash flows from operating activities section of Diversified's 2018 statement of cash flows using the indirect method Complete this question by entering your answers in the tabs below

Explanation / Answer

1)

Diversified portfolio corporation

Cash flow statement

For the year ended 31 december 2018

2)

Diversified portfolio corporation

Cash flow statement(partial)

For the year ended 31 december 2018

Diversified portfolio corporation

Cash flow statement

For the year ended 31 december 2018

Cash Flow from operating activity collection from receivable [103000beginning receivable +960000-126000] 937000 payment for operating expense [63000beginning +730000current expense-76000ending -33000depreciation] (684000) Payment for income tax [21000+46000-13000] (54000) Net cash flow from operating activity 199000 cash flow from investing activity sale of long term investment 53000 Net cash provided by investing activity 53000 cash flow from financing activity common stock issued 106000 dividend paid (83000) net cash provided by financing activity 23000 net cash provided during the year 275000 Beginning cash 73000 ending cash balance 348000

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