Exercise 23-13 Blue Inc., a greeting card company, had the following statements prepared as of December 31, 2017. BLUE INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 12/31/17 12/31/16 Cash $5,900 $7,000 Accounts receivable 61,400 51,500 Short-term debt investments (available-for-sale) 35,000 18,200 Inventory 40,000 60,500 Prepaid rent 5,000 4,100 Equipment 152,900 131,100 Accumulated depreciation-equipment (35,200 ) (25,100 ) Copyrights 45,800 50,000 Total assets $310,800 $297,300 Accounts payable Income taxes payable Salaries and wages payable Short-term loans payable Long-term loans payable Common stock, $10 par Contributed capital, common stock Retained earnings Total liabilities & stockholders' equity $46,100 $40,100 3,900 5,900 8,000 4,000 8,100 10,000 60,400 69,300 100,000 100,000 30,000 30,000 54,300 38,000 $310,800 $297,300 BLUE INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017 Sales revenue Cost of goods sold Gross profit Operating expenses Operating income Interest expense $11,500 Gain on sale of equipment 2,100 Income before tax Income tax expense Net income $332,700 176,000 156,700 119,300 37,400 9,400 28,000 5,600 $22,400 Additional information: 1. Dividends in the amount of $6,100 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. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) BLUE INC. Statement of Cash Flows