Sarasota Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

SARASOTA INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016

12/31/17 12/31/16

Cash $6,100 $6,900

Accounts receivable 61,900 50,500

Short-term debt investments (available-for-sale) 34,800 18,200

Inventory 39,900 59,800

Prepaid rent 4,900 4,000

Equipment 155,500 131,200

Accumulated depreciationequipment (34,800 ) (25,300 )

Copyrights 45,700 50,200

Total assets $314,000 $295,500

Accounts payable $46,200 $39,700

Income taxes payable 4,000 6,100

Salaries and wages payable 7,900 4,000

Short-term loans payable 7,900 10,000

Long-term loans payable 59,800 68,600

Common stock, $10 par 100,000 100,000

Contributed capital, common stock 30,000 30,000

Retained earnings 58,200 37,100

Total liabilities & stockholders equity $314,000 $295,500

SARASOTA INC. INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2017

Sales revenue $335,575

Cost of goods sold 173,200

Gross profit 162,375

Operating expenses 119,100

Operating income 43,275

Interest expense $11,400

Gain on sale of equipment ( 2,000 ) 9,400

Income before tax 33,875

Income tax expense 6,775

Net income $27,100

Additional information:

1. Dividends in the amount of $6,000 were declared and paid during 2017.

2. Depreciation expense and amortization expense are included in operating expenses.

3. No unrealized gains or losses have occurred on the investments during the year.

4. Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the direct method.