Question

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

SWIFTY INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		12/31/17			12/31/16
Cash		$6,000			$7,000
Accounts receivable		61,700			51,200
Short-term debt investments (available-for-sale)		34,900			18,000
Inventory		39,700			60,400
Prepaid rent		4,900			4,000
Equipment		155,500			128,900
Accumulated depreciation—equipment		(35,100	)		(25,000	)
Copyrights		46,500			50,400
Total assets		$314,100			$294,900
Accounts payable		$45,600			$39,800
Income taxes payable		4,000			6,000
Salaries and wages payable		8,000			4,000
Short-term loans payable		8,000			9,900
Long-term loans payable		59,700			68,600
Common stock, $10 par		100,000			100,000
Contributed capital, common stock		30,000			30,000
Retained earnings		58,800			36,600
Total liabilities & stockholders’ equity		$314,100			$294,900

SWIFTY INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue				$339,375
Cost of goods sold				175,000
Gross profit				164,375
Operating expenses				119,400
Operating income				44,975
Interest expense		$11,500
Gain on sale of equipment		1,900		9,600
Income before tax				35,375
Income tax expense				7,075
Net income				$28,300

Additional information:

1.		Dividends in the amount of $6,100 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 $19,800 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1