Question

Financial statements for E-Perform Inc follow:

E-Perform, Inc

Balance Sheet

December 31

	2009	2008
Assets
Cash	$97,800	$48,400
Accounts Receivable	75,800	43,000
Inventories	122,500	92,850
Prepaid Expenses	38,400	26,000
Available-for-Sale Securities	128,000	114,000
Property, plant and equipment	270,000	242,500
Accumulated Depreciation	(50,000)	(52,000)
Total Assets	$682,500	$514,750
Liabilities and Shareholders' Equity
Accounts Payable	$93,000	$77,300
Accrued Expenses Payable	11,500	7,000
Notes Payable	110,000	150,000
Common Shares	220,000	175,000
Retained Earnings	234,000	105,450
Accumulated other comprehensive income	14,000	0
Total liabilities and shareholders' equity	$682,500	$514,750

Statement of Earnings:

Sales		$492,780
Cost of Goods Sold		185,460
Gross Profit		307,320
Operating Expenses
Other operating expenses	$62,410
Depreciation expense	46,500	108,910
Earnings from operations		198,410
Other expenses
Interest expense	$4,730
Loss on sale of equipment	7,500	12,230
Earnings before income tax		186,180
Income tax expense		45,000
Net Earnings		$141,180

Additional Information:

1. The available-for-sale securities were revalued to their fair value of $128,000 at the end of 2009.

2. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 note payable

3. Old equipment having an original cost of $57,500 was sold for $1,500

4. Accounts payable relate only to merchandise creditors

5. Notes payable were repaid during the year

**Instructions: Prepare the cash flow statement using the direct method.