Question

Problem 23-3

Shamrock Company has not yet prepared a formal statement of cash flows for the 2017 fiscal year. Comparative balance sheets as of December 31, 2016 and 2017, and a statement of income and retained earnings for the year ended December 31, 2017, are presented as follows.

SHAMROCK COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017 ($000 OMITTED)
Sales revenue				$3,800
Expenses
Cost of goods sold		$1,210
Salaries and benefits		720
Heat, light, and power		80
Depreciation		80
Property taxes		20
Patent amortization		30
Miscellaneous expenses		10
Interest		30		2,180
Income before income taxes				1,620
Income taxes				810
Net income				810
Retained earnings—Jan. 1, 2017				290
				1,100
Stock dividend declared and issued				560
Retained earnings—Dec. 31, 2017				$540

SHAMROCK COMPANY
COMPARATIVE BALANCE SHEETS
AS OF DECEMBER 31
($000 OMITTED)

Assets

2017

2016

Current assets   Cash

$410

$120

   U.S. Treasury notes (available-for-sale)

10

50

   Accounts receivable

770

510

   Inventory

730

570

      Total current assets

1,920

1,250

Long-term assets   Land

140

70

   Buildings and equipment

910

610

   Accumulated depreciation—buildings and equipment

(220

)

(140

)

   Patents (less amortization)

110

140

      Total long-term assets

940

680

      Total assets

$2,860

$1,930

  Liabilities and Stockholders’ EquityCurrent liabilities   Accounts payable

$457

$350

   Income taxes payable

43

30

   Notes payable

350

350

      Total current liabilities

850

730

Long-term notes payable—due 2019

210

210

    Total liabilities

1,060

940

Stockholders’ equity   Common stock

1,260

700

   Retained earnings

540

290

     Total stockholders’ equity

1,800

990

      Total liabilities and stockholders’ equity

$2,860

$1,930

Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and cost of goods sold. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1