E12-25A (Learning Objective 4: Preparing the statement of cash flows direct method)

E12-25A (Learning Objective 4: Preparing the statement of cash flows direct method) The writing assignmentincome statement and additional data of Cobbs Hill, Inc., follow:Cobbs Hill, Inc.Income StatementYear Ended April 30, 2010Revenues:Sales revenue………………….. $232,000Dividend revenue ……………. 11,000 $243,000Expenses:Cost of goods sold ………….. 108,000Salary expense ……………….. 46,000Depreciation expense ………. 31,000Advertising expense ………… 11,500Interest expense ……………… 2,100Income tax expense…………. 9,000 207,600Net income ………………………… $ 35,400Additional data:a. Collections from customers are $13,000 more than sales.b. Payments to suppliers are $1,300 less than the sum of cost of goods sold plus adver-tising expense.c. Payments to employees are $2,000 more than salary expense.d. Dividend revenue, interest expense, and income tax expense equal their cash amounts.e. Acquisition of plant assets is $143,000. Of this amount, $100,000 is paid in cash and$43,000 by signing a note payable.f. Proceeds from sale of land total $28,000.g. Proceeds from issuance of common stock total $93,000.h. Payment of long-term note payable is $17,000.i. Payment of dividends is $8,500.j. Cash balance, April 30, 2009, was $21,000.Requirements1. Prepare Cobbs Hill, Inc.s statement of cash flows and accompanying schedule of noncashinvesting and financing activities. Report operating activities by the direct method.2. Evaluate Cobbs Hills cash flows for the year. In your evaluation, mention all three cate-gories of cash flows and give the reason for your evaluation.