The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below:
Service revenue $ 1,220,000
Operating expenses 900,000
Income before income taxes 320,000
Income tax expense 80,000
Net income $ 240,000
The following balance sheet information also is available:
12/31/2021 12/31/2020
Cash $ 455,000 $ 90,000
Accounts receivable 160,000 120,000
Accrued liabilities (for operating expenses) 110,000 80,000
Income taxes payable 30,000 55,000
In addition, the following transactions took place during the year:
a. Common stock was issued for $140,000 in cash.
b. Long-term investments were sold for $70,000 in cash.
c. The original cost of the investments also was $70,000. $100,000 in cash dividends was paid to shareholders.
d. The company has no outstanding debt, other than those payables listed above.
e. Operating expenses include $50,000 in depreciation expense.
Required:1. Prepare a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.)