Statement of Cash Flows (Direct Method) The Rainbow Company's income statement and comparative balance sheets as of December 31 of 2016 and 2015 follow: RAINBOW COMPANY Income Statement For the Year Ended December 31, 2016 Sales Revenue 750,000 19,000 769,000 Dividend Income Cost of Goods Sold Wages and Other Operating Expenses Depreciation Expense Patent Amortization Expense Interest Expense Income Tax Expense Loss on Sale of Equipment Gain on Sale of Investments Net Income 440,000 130,000 39,000 7,000 13,000 44,000 5,000 (10,000) 668,000 101,000