Assignment #3 - Chp 17&18-Cash Flow Statement (Part 1) This assignment requires you to prepare a cash flow statement using the indirect method Happy Holidays Co. is a retail store that sells high-end travel accessories. Below is the financial information for the company Happy Holiday, Co. Income Statement (Condensed) Year Ended December 31, 2016 Revenues Sales $ 297,500 Cost of goods sold 99,460 Gross Profit 198,040 Operating expenses (excluding depreciation expense) $ 73,370 Depreciation expense Profit from Operations 58,000 131,370 66,670 Other Revenue and expenses Interest expense 10,440 Gain on sale of equipment 8,750 Profit before income tax 64,980 Income tax expense 32,670 $ 32,310 Profit Happy Holiday, Co. Balance Sheet (Condensed) December 31, 2016 Assets 2.016 2015 Cash $144,700 $57,275 Accounts receivable 45,835 30,000 Inventories 152,300 95,000 Prepaid expenses Office supplies Property, plant, and equipment Accumulated depreciation 10,000 16,500 84,500 75,000 365,000 350,000 (107,000) (50,000) Land 100,000 Total assets $795,335 $573,775 Liabilities and Shareholders' Equity Accounts payable Accrued expenses payable Notes payable (long-term) Common shares Retained earnings Total liabilities and shareholders' equity $95,000 $55,000 35,000 25,750 100,000 50,000 150,000 275,000 293,025 290,335 $573,775 $795,335 Assignment #3-Chp 17&18-Cash Flow Statement (Part 1) Additional information for 2016 1. A cash dividend was paid. You must deterrmine the amount 2. Land was acquired by paying $50,000 cash and signing a $50,000 long-term note payable. 3. Equipment costing $25,000 was purchased for cash. 4. Equipment was sold for $17,750. It had a carrying amount or book value of $9,000 (cost of $10,000 less accumulated depreciation of $1,000). Required: (Show all calculations and round to closest dollar) Prepare the cash flow statement using the INDIRECT METHOD b. Show the ledger or T-accounts for the transactions in the following accounts a. Property, Plant and Equipment Accumulated Depreciation ii Retained Earnings C. Answer the following questions: Does the company have enough cash flow to pay its current liabilities? Explain. i. i. What was the primary source of cash? What was the primary use of cash? d. Are there any non-cash investing or financing activities? Explain