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34) Avatar Auto Parts Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2015:

Avatar Company

Comparative Balance Sheet

December 31, 2015 and 2014

2015

2014

Increase / (Decrease)

Cash

$33,000

$13,000

$20,000

Accounts Receivable

29,000

36,000

(7,000)

Inventory

56,000

29,000

27,000

Plant and Equipment, net

126,000

92,000

34,000

Total Assets

$244,000

$170,000

$74,000

Accounts Payable

$9,000

$13,000

$(4,000)

Accrued Liabilities

7,000

3,000

4,000

Long-term Notes Payable

70,000

79,000

(9,000)

Total Liabilities

$86,000

$95,000

$(9,000)

Common Stock

$55,000

$3,000

$52,000

Retained Earnings

115,000

78,000

37,000

Treasury Stock

(12,000)

(6,000)

(6,000)

Total Stockholders' Equity

$158,000

$75,000

$83,000

Total Liabilities and Stockholders' Equity

$244,000

$170,000

$74,000

Avatar Company

Income Statement

Year Ended December 31, 2015

Sales Revenue

$291,300

Interest Revenue

1,000

Gain on Sale of Plant Assets

6,000

Total Revenues and Gains

$298,300

Cost of Goods Sold

145,000

Salaries and Wages Expense

49,000

Depreciation Expense—Plant Assets

16,000

Other Operating Expense

25,000

Interest Expense

3,500

Income Tax Expense

7,800

Total expenses

246,300

Net Income

$52,000

Avatar Company

Statement of Retained Earnings

Year Ended December 31, 2015

Retained Earnings, January 1, 2014

$78,000

Add: Net income

52,000

Less: Dividends

15,000

Retained Earnings, December 31, 2014

$115,000

Prepare the operating activities section of the statement of cash flows, using the direct method.

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