Requirement:

• Based on the provided information. Can you prepare the statement of cash flow using direct method?

Washington Irving, Inc. Comparative Balance Sheets As of January 31, 2018 2017 2016 OutwN. Assets Current Assets: Cash and cash equivalents S 754,535.50 S 469,037.50 Accounts receivable (Net) S 257,070.00 233,450.00 9 Inventory $ 1,797,510.00 $ 1,488,600.00 10 Income taxes receivable S 3,477.00 S 11 Notes receivable 311,700.00 $ 339,200.00 12 Investments S 995,090.00 $ 1,068,750.00 13 Total current assets $ 4,119,382.50 $ 3,599,037.50 14 Non-current Assets 15 Property, plant, and equipment (Net) $ 12,193,000.00 $ 12,700,000.00 16 Right-of-use asset $205,420.97 $ 17 Investments $ 3,709,800.00 $ 3,631,150.00 18 Goodwill and intangible assets $ 2,300,000.00 $ 2,360,000.00 19 Deferred income taxes S 26,085.50 20 Total non-current assets $ 18,434,306.47 $ 18,691,150.00 21 Total Assets $ 22,553,688.97 $ 22,290,187.50 22 Liabilities and Equity 23 Current Liabilities: 24 Accounts payable 242,100.00 S 230,100.00 25 Notes payable 258,300.00 280,900.00 26 Income taxes payable S S 3,477.00 27 Current lease payable S 72,500.00 28 Current maturity of long-term debt S 256,900.00 S 29 Total current liabilities S 829,800.00 S 514,477.00 30 Non-current Liabilities 31 Long-term debt ( net) $ 4,574,310.00 $ 4,861,100.00 32 Pensions 6,302,590.00 $ 6,151,130.00 33 Leases Payable S 132,920.97 34 Deferred income taxes S 51,860.00 47,270.00 35 Liability - RSU Plan 50,000.00 36 Liability - Potential Additional Tax S 21,000.00 S 37 Total noncurrent liabilities $ 11,132,680.97 $ 11,059,500.00 38 Total Liabilities $ 11,962,480.97 $ 11,573,977.00 39 Common Stock, $0.01 par value S 14,972.50 S 14,897.50 40 Additional paid-in capital $ 10,906,590.00 $ 10,829,790.00 41 Retained earnings S (158,024.50) $ 3,603.00 42 Accumulated other comprehensive income (loss) S (172,330.00) $ (132,080.00) 43 Total Equity $ 10,591,208.00 $ 10,716,210.50 44 Total Liabilities and Equity $ 22,553,688.97 $ 22,290,187.50Washington Irving, Inc. 2 Statements of Equity For the Year Ending January 31, 2017 Accumulated Other Additional Paid-in Comprehensive 4 Common Stock Capital Retained Earnings Income 5 Balance at January 31, 2016 S 15,000.00 S 10,860,000.00 (43,267.00) $ (28,680.00) 6 Net income S 48,620.00 7 Other comprehensive income (loss) S S (103,400.00) 8 Issuance of common stock 72.50 S 45,240.00 S 9 |Purchase of common stock (175.00) S (100,450.00) $ 10 Stock-based compensation S 25,000.00 11 Cash dividends declared on common sto $ S (1,750.00) S 12 Balance at January 31, 2017 14,897.50 10,829,790.00 S 3,603.00 S (132,080.00) 13 Net income S S (159,377.50) $ 14 Other comprehensive income (loss) S S S (40,250.00) 15 Issuance of common stock 100.00 S 62,400.00 S S 16 Purchase of common stock (25.00) S (10,600.00) $ S 17 Stock-based compensation S 25,000.00 S 18 Cash dividends declared on common sto $ (2,250.00) 19 Balance at January 31, 2018 14,972.50 S 10,906,590.00 (158,024.50) (172,330.00)Washington Irving, Inc. Comparative Statements of Comprehensive Income A W N For the Year Ending January 31, 2018 2017 2016 Gross sales $ 3,870,250.00 $ 3,250,000.00 6 Less: Sales returns (1) (275,000.00) $ (150,000.00) 7 Net sales $ 3,595,250.00 $ 3,100,000.00 8 Cost of goods sold $ (2,260,890.00) $ (1,850,000.00) 9 Gross profit $ 1,334,360.00 $ 1,250,000.00 10 Operating expenses: 11 Selling expenses 526,800.00 $ 425,000.00 12 General and administrative expenses S 382,500.00 S 279,800.00 13 Research and development expenses 75,000.00 $ 125,000.00 14 Goodwill impairment 60,000.00 S 200,000.00 15 Depreciation expense S 425,000.00 S 365,000.00 16 Amortization expense (leases) 60,872.40 S 17 Bad debts expense 24,890.00 S 18 Total operating expenses $ 1,555,062.40 $ 1,394,800.00 19 Operating income $ (220,702.40) $ (144,800.00 20 Other income (expense): 21 Interest and dividend revenue 159,800.00 S 126,500.00 22 Gain (loss) on sale of TS investments (1,250.00) $ 23 Gain (loss) on sale of property (12,500.00) 165,000.00 24 Unrealized holding gain (loss) on TS investments 12,590.00 $ 18,750.00 25 Interest expense (101,287.60) $ (90,650.00) 26 Total other income (expense), net 57,352.40 $ 219,600.00 27 Income before income taxes $ (163,350.00) $ 74,800.00 28 Income tax expense (benefit) S (3,972.50) $ 26,180.00 29 Net income $ (159,377.50) $ 48,620.00 30 Other Comprehensive Income 31 Defined benefit plans, net $ (118,900.00) $ (135,900.00) 32 Unrealized holding gain (loss) on AFS investments S 78,650.00 $ 32,500.00 33 Comprehensive income (loss) $ (199,627.50) $ (54,780.001 Note: 2 The loss on sale of TS investments is for securities originally purchased for $40,000 and sold for $85,000 BV: $ 40,000.00 Proceeds: $85,000.00 3 $32,000 of interest revenue is nontaxable Nontax Rev S 32,000.00 4 Cash sales were $3,265,900, the rest were sales on account Cash Sales $ 3,265,900.00 5 The deferred tax liability is due to differences in tax to book depreciation methods 6 Included in accounts payable are all relevant current liabilities payable, excepting income taxes payable 7 No new long-term debt was issued during the year. 8 G&A includes pension expense of $85,410 Pension Exp. S 85,410.00 9 Contributions to pension plan assets of $52,850 were made this year Contributions S 52,850.00 10 G&A expenses include $50,000 in RSUs payable in either equity or cash and $25,000 payable only in equity Liab. 50,000.00 Equity $ 25,000.00 11 $85,260 of the returns were for sales on account AR Returns S 85,260.00 12 Leases have a four year lease term with one payment due immediately and then due at Feb 1 of each year thereafter 13 Assume that the goodwill on the balance sheet is NEVER tax deductible and ignore all other temporary differences Nontax Impair S 60,000.00 The loss on the sale of property is for PP&E which was sold for $289,500 PPE Proceeds $ 289,500.00