Exercise 23-13 Ayayai Inc., a greeting card company, had the following statements prepared as of December 31, 2017. AYAYAI INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 12/31/17 12/31/16 Cash $6,000 $7,100 Accounts receivable 61,400 51,500 Short-term debt investments (available-for-sale) 34,600 18,000 Inventory 40,300 60,200 Prepaid rent 4,900 4,000 Equipment 152,400 130,600 Accumulated depreciationequipment (34,800 ) (25,200 ) Copyrights 45,700 49,800 Total assets $310,500 $296,000 Accounts payable $46,100 $40,300 Income taxes payable 4,000 6,000 Salaries and wages payable 7,900 4,000 Short-term loans payable 8,100 10,000 Long-term loans payable 59,700 69,600 Common stock, $10 par 100,000 100,000 Contributed capital, common stock 30,000 30,000 Retained earnings 54,700 36,100 Total liabilities & stockholders equity $310,500 $296,000 AYAYAI INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 Sales revenue $333,450 Cost of goods sold 174,300 Gross profit 159,150 Operating expenses 118,800 Operating income 40,350 Interest expense $11,600 Gain on sale of equipment 2,000 9,600 Income before tax 30,750 Income tax expense 6,150 Net income $24,600 Additional information: 1. Dividends in the amount of $6,000 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.