Use the McDonald data from Problem P16-41B.
The 2016 income statement and comparative balance sheet of McDonald, Inc. follow:
Additionally, McDonald purchased land of $20,500 by financing it 100% with long- term notes payable during 2016. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $0. The cost and the accumulated depreciation of the disposed asset was $13,240. Plant asset was acquired for cash.
1. Prepare the 2016 statement of cash flows by the direct method.
2. How will what you learned in this problem help you evaluate an investment?