Question

Condensed financial data of Waterway Company for 2017 and 2016 are presented below.

WATERWAY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016
2017
2016
Cash      
$1,780
$1,170
Receivables      
1,760
1,280
Inventory      
1,620
1,880
Plant assets      
1,910
1,670
Accumulated depreciation      
(1,210
)
(1,160
)
Long-term investments (held-to-maturity)      
1,330
       
1,440

$7,190
       
$6,280

                       
Accounts payable      
$1,230
$920
Accrued liabilities      
210
250
Bonds payable      
1,370
1,560
Common stock      
1,920
1,680
Retained earnings      
2,460
       
1,870

$7,190
       
$6,280

WATERWAY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue      
$6,820
Cost of goods sold      
4,600
Gross margin      
2,220
Selling and administrative expenses      
910
Income from operations      
1,310
Other revenues and gains      
Gain on sale of investments      
80
Income before tax      
1,390
Income tax expense      
540
Net income       850
Cash dividends
260
Income retained in business
$590

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the indirect method.

Answer 1