P23-3 (SCFDirect Method) Mortonson Company has not yet prepared a formal statement of cash flows for the 2014 fiscal year. Comparative balance sheets as of December 31, 2013, and 2014, and a statement of income and retained earnings for the year ended December 31, 2014, are presented below.
MORTONSON COMPANY
Statement of Income and Retained Earnings
For The Year Ended December 31, 2014
($000 Omitted)
Sales		$3,800
Expenses
Cost of goods sold	$1,200
Salaries and benefits	725
Heat, light, and power	75
Depreciation	80
Property taxes	19
Patent amortization	25
Miscellaneous expenses	10
Interest	30	2,164
Income before income taxes		1,636
Income taxes		818
Net income		818
Retained earnings - January 1, 2014		310
		1,128
Stock dividend declared and issued		600
Retained earnings - December 31, 2014		$528
MORTONSON COMPANY
Comparative Balance Sheet
December 31
($000 Omitted)
Assets	2014	2013
Current assets
Cash	$333	$100
U.S. Treasury notes (Available-for-sale)	10	50
Accounts receivable	780	500
Inventory	720	560
Total current assets	1,843	1,210
Long-term assets
Land	150	70
Buildings and equipment	910	600
Accumulated depreciation	(200)	(120)
Patents (less amortization)	105	130
Total long-term assets	965	680
Total assets	$2,808	$1,890
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$420	$330
Income taxes payable	40	30
Notes payable	320	320
Total current liabilities	780	680
Long-term notes payable - due 2016	200	200
Total liabilities	980	880
Stockholders' equity
Common stock outstanding	1,300	700
Retained earnings	528	310
Total stockholders' equity	1,828	1,010
Total liabilities and stockholders' equity	$2,808	$1,890
Instructions:
Prepare a statement of cash flows using the direct method. Changes in accounts receivable and in accounts payable relate to sales and cost of sales. Do not prepare a reconciliation schedule.
MORTONSON COMPANY
Statement of Cash Flows
For The Year Ended December 31, 2014
($000 omitted)
Cash flows from operating activities
Title		Amount
Title	Amount
Title	Amount
Title	Amount
Title	Amount
Title	Amount
Title	Amount
Title	Amount	Formula
Net cash provided by operating activities		Formula
Cash flows from investing activities
Title	Amount
Title	Amount
Title	Amount
Net cash used by investing activities		Formula
Increase in cash		Amount
Title		Amount
Title		Formula
(a) Sales		Amount
Title		Amount
		Formula
Add: Title		Amount
Cash receipts (collections from customers)		Formula
(b) Cost of goods sold		Amount
Add: Title		Amount
Title		Formula
Deduct: Title		Amount
Title		Formula
Deduct: Title		Amount
		Formula
Add: Title		Amount
Cash purchases (payments for merchandise)		Formula
(c) Income taxes		Amount
Title		Amount
		Formula
Add: Title		Amount
Income taxes (cash)		Formula