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.