Problem - Sheffield Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
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SHEFFIELD INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
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12/31/17
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12/31/16
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Cash
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$6,100
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$6,900
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Accounts receivable
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62,500
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51,000
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Short-term debt investments (available-for-sale)
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34,800
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18,100
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Inventory
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39,600
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60,200
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Prepaid rent
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4,900
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4,000
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Equipment
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154,500
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130,100
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Accumulated depreciation-equipment
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(34,800)
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(25,300)
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Copyrights
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46,300
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50,400
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Total assets
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$313,900
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$295,400
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Accounts payable
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$46,000
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$40,200
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Income taxes payable
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4,000
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6,000
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Salaries and wages payable
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8,100
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4,000
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Short-term loans payable
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8,000
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10,000
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Long-term loans payable
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59,700
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69,000
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Common stock, $10 par
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100,000
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100,000
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Contributed capital, common stock
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30,000
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30,000
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Retained earnings
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58,100
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36,200
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Total liabilities & stockholders' equity
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$313,900
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$295,400
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SHEFFIELD INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
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Sales revenue
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$339,075
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Cost of goods sold
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175,000
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Gross profit
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164,075
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Operating expenses
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119,900
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Operating income
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44,175
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Interest expense
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$11,300
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Gain on sale of equipment
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2,000
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9,300
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Income before tax
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34,875
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Income tax expense
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6,975
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Net income
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$27,900
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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.