Prepare a statement of cash flows using the indirect method

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Reference no: EM131629660

Problem - Sheffield Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

SHEFFIELD INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016


12/31/17

12/31/16

Cash

$6,100

$6,900

Accounts receivable

62,500

51,000

Short-term debt investments (available-for-sale)

34,800

18,100

Inventory

39,600

60,200

Prepaid rent

4,900

4,000

Equipment

154,500

130,100

Accumulated depreciation-equipment

(34,800)

(25,300)

Copyrights

46,300

50,400

Total assets

$313,900

$295,400




Accounts payable

$46,000

$40,200

Income taxes payable

4,000

6,000

Salaries and wages payable

8,100

4,000

Short-term loans payable

8,000

10,000

Long-term loans payable

59,700

69,000

Common stock, $10 par

100,000

100,000

Contributed capital, common stock

30,000

30,000

Retained earnings

58,100

36,200

Total liabilities & stockholders' equity

$313,900

$295,400

 

SHEFFIELD INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017

Sales revenue


$339,075

Cost of goods sold


175,000

Gross profit


164,075

Operating expenses


119,900

Operating income


44,175

Interest expense

$11,300


Gain on sale of equipment

2,000

9,300

Income before tax


34,875

Income tax expense


6,975

Net income


$27,900

Additional information:

1. Dividends in the amount of $6,000 were declared and paid during 2017.

2. Depreciation expense and amortization expense are included in operating expenses.

3. No unrealized gains or losses have occurred on the investments during the year.

4. Equipment that had a cost of $19,900 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the indirect method.

Reference no: EM131629660

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