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Presented below are the 2016 income statement and comparative balance sheets for Santana Industries. SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2016

Presented below are the 2016 income statement and comparative balance sheets for Santana Industries.

SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in thousands)
Sales revenue $ 18,250
Service revenue 7,400
Total revenue $ 25,650
Operating expenses:
Cost of goods sold 9,200
Selling 4,400
General and administrative 3,500
Total operating expenses 17,100
Operating income 8,550
Interest expense 400
Income before income taxes 8,150
Income tax expense 4,500
Net income $ 3,650

Balance Sheet Information ($ in thousands) Dec. 31, 2016 Dec. 31, 2015
Assets:
Cash $ 9,350 $ 4,000
Accounts receivable 6,500 4,200
Inventory 8,000 5,000
Prepaid rent 350 700
Plant and equipment 18,500 16,000
Less: Accumulated depreciation (7,100 ) (6,500 )
Total assets $ 35,600 $ 23,400
Liabilities and Shareholders Equity:
Accounts payable $ 5,400 $ 3,100
Interest payable 300 0
Deferred service revenue 1,200 800
Income taxes payable 750 1,200
Loan payable (due 12/31/2015) 9,000 0
Common stock 12,000 12,000
Retained earnings 6,950 6,300
Total liabilities and shareholders' equity $ 35,600 $ 23,400

Additional information for the 2016 fiscal year ($ in thousands):
1. Cash dividends of $3,000 were declared and paid.
2. Equipment costing $8,000 was purchased with cash.
3.

Equipment with a book value of $2,500 (cost of $5,500 less accumulated depreciation of $3,000) was sold for $2,500.

4. Depreciation of $3,600 is included in operating expenses.

Required:

Prepare Santana Industries' 2016 statement of cash flows, using the indirect method to present cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

2.

Assume that by December 31, 2016, the division had not yet been sold but was considered held for sale. The fair value of the divisions assets on December 31 was $5,240,000. How would the presentation of discontinued operations be different from your answer to requirement 1? (Amounts to be deducted should be indicated with a minus sign.)

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