Question 3 The financial statements of Wildhorse Ltd., private company reporting under ASPE, follow: WILDHORSE LTD. Balance Sheet December 31 Assets 2017 Cash $10,493 Short-term notes receivable 12,750 Accounts receivable 30,200 Inventory 31,700 Property, plant, and equipment 72,100 Accumulated depreciation (32,200) Total assets $125,043 Liabilities and Shareholders' Equity Accounts payable $27,200 Income tax payable 4,100 Notes payable 15,600 Common shares 24,600 Retained earnings 53,543 Total liabilities and shareholders' equity $125,043 2016 $12,700 22,050 16,200 27,200 79,200 (26,700) $130,650 $43,600 20,100 10,600 24,600 31,750 $130,650 WILDHORSE LTD. WILDHORSE LTD. Income Statement Year Ended December 31, 2017 Sales $282,700 Cost of goods sold 193,100 Gross profit 89,600 Operating expenses $36,550 Loss on sale of equipment 2,550 39,100 Profit from operations 50.500 Other revenues and expenses Interest revenue $(1,540) Interest expense 2,550 1,010 Profit before income tax 49,490 Income tax expense 16,597 Profit $32,895 Additional information 1. Short-term notes receivable are from loans to other companies. During the year, the company collected the outstanding balance at December 31, 2016, and made new loans in the amount of $12.750 2. Equipment was sold during the year. This equipment cost $17,700 originally and had a carrying amount of 10.150 at the time of sale 3 Equipment couting 110,000 was purchased in exchange for a $10,000 note pavable 4 Depreciation expense is included in operating expenses care from the sale of merchandise on credt Income tax exponse Profit 16,597 $32,893 Additional informations 1. Short-term notes receivable are from loans to other companies. During the year, the company collected the outstanding balance at December 31, 2016, and made new loans in the amount of $12,750. 2. Equipment was sold during the year. This equipment cost $17,700 originally and had a carrying amount of $10,150 at the time of date 2. Equipment costing $10,600 was purchased in exchange for a $10,000 note payable 4. Depreciation expenses included in operating expenses. 5. Accounts receivable are from the sale of merchandise on credit 6. Accounts payable relate to the purchase of merchandise on credit Prepare the operating section of the cash flow statement using the direct method. (Show amounts that decrease cash flow with either a won.. 15.000 ar in parenthesis .. ( 15.000).) WILDHORSE LTD. Cash Flow Statement (Partial) Direct Method