Problem 23-6

Comparative balance sheet accounts of Kingbird Inc. are presented below.

KINGBIRD INC.

COMPARATIVE BALANCE SHEET ACCOUNTS

AS OF DECEMBER 31, 2017 AND 2016

December 31

Debit Accounts2017

2016

Cash$41,700

$33,500

Accounts Receivable69,900

59,800

Inventory30,000

24,200

Equity investments22,400

38,100

Machinery30,100

18,800

Buildings67,400

56,700

Land7,600

7,600

$269,100

$238,700

Credit AccountsAllowance for Doubtful Accounts$2,200

$1,500

Accumulated DepreciationMachinery5,500

2,300

Accumulated DepreciationBuildings13,400

8,900

Accounts Payable35,200

24,700

Accrued Payables3,400

2,600

Long-Term Notes Payable21,300

31,300

Common Stock, no-par150,000

125,000

Retained Earnings38,100

42,400

$269,100

$238,700

Additional data (ignoring taxes):

1.Net income for the year was $41,700.2.Cash dividends declared and paid during the year were $21,000.3.A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.4.Equity investments (level of ownership is less than 20%) that cost $24,800 were sold during the year for $28,600. No unrealized gains and losses were recorded on these investments in 2017.5.Machinery that cost $3,800, on which $750 of depreciation had accumulated, was sold for $2,250.

Kingbird's 2017 income statement follows (ignoring taxes).

Sales revenue$535,400

Less: Cost of goods sold376,600

Gross margin158,800

Less: Operating expenses (includes $8,450 depreciation and $5,377 bad debts)120,100

Income from operations38,700

Other: Gain on sale of investments$3,800

Loss on sale of machinery(800

)3,000

Net income$41,700

(a)Compute net cash flow from operating activities using the direct method.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Net cash flow from operating activities$

(b)Prepare a statement of cash flows using the indirect method.