Additionally, McKnight purchased land of $27,800 by financing it 100% with long-term notes payable during 2016. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $0. The cost and the accumulated depreciation of the disposed asset was $10,200. The plant acquisition was for cash.

Requirements 1. Prepare the 2016 statement of cash flows, formatting operating activities by the direct method. 2. Prepare the operating activities section also by the indirect method. 3. How will what you learned in this problem help you evaluate an investment?

P16-34A Preparing the statement of cash flows Learning Objective 2 1. Net Cash Prov. by Op. Act. $132,700 The 2016 income statement and comparative balance sheet of McKnight, Inc. follow- MEKNIGHT, ING Income Statement Year Ended December 31, 2016 Sales Revenue Cost of Goods Sold Gross Profit $441,000 202,200 238,800 $ 76,400 Operating Expenses Salaries Expense Depreciation Expense Plant Assets Other Operating expenses Total Operating Expenses Operating Income Other Revenues and (Expenses); 14,200 10,500 101,100 137,700 Interest Revenie 8,800 (21 600) Interest Expense Total Other Revenues and (Expenses) (12,800 124,900 Net Indone Before Income Taxes Income Tax Expense 19,500 Neluncome $ 105,400 MEKNIGHT, INC Comparative Balance Sheet December 31, 2016 and 2015 2016 2015 Assets Current Assets: Cash $26.400 $ 15,100 26,700 25,200 79,700 91,600 Accounts Receivable Merchandise Inventory Long-term Assets: Plant Assets 118,510 110,310 (15,610) Accumulated Depreciation Plant Assets (19,610) Land 34,800 7,000 Total Assets $ 266,500 $ 233,600 Liabilities $35,100 $ 30,500 28,200 30,100 Current Liabilities: Accounts Payable Accrued liabilities Long-term liabilities: Notes Payable Jotal Liabilities 73,000 106,000 166,600 136,300 Stockholders' Equity common stock no par 88,100 Related Earnings Total Stockholders Equity Hotel Liabile and stockholders Equity 42,100 130,200 64.700 2.300 67.000 $ 266,500 5233,600