XS Supply Company is developing its annual financial statements at December 31, 2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

Additional Data:

a. Bought equipment for cash, $21,000

b. Paid $6,000 on the long-term note payable

c. Issued new shares for $16,000 cash

d. No dividends were declared or paid

e. Other expenses included depreciation, $5,000; wages, $20,000; taxes, $6,000; other, $6,800

f. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

Required:

1. Prepare the statement of cash flows for the year ended December 31, 2017, using the indirect method.?

2. Evaluate the statement of cash flows.

Transcribed Image Text:

2017 2016 Balance Sheet at December 31 $ 34,000 $ 29,000 Cash Accounts Receivable 35,000 28,000 Merchandise Inventory 41,000 38,000 Property and Equipment Less: Accumulated Depreciation 121,000 100,000 (30,000) (25,000) $201,000 $170,000 $ 36,000 $ 27,000 Accounts Payable Wages Payable Note Payable, Long-Term Contributed Capital Retained Earnings 1,200 38,000 1,400 44,000 88,600 72,600 25,000 $170,000 37,200 $201,000 Income Statement for 2017 $120,000 Sales Cost of Goods Sold 70,000 Other Expenses 37,800 $ 12,200 Net Income