The 2016 income statement and comparative balance sheet of Four Seasons,Inc. follow: LOADING...(Click the icon to view the income statement.)

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Additionally, Four Seasons purchased land of $24,300 by financing it 100% with long-term notes payable during 2016.

During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $0. The cost and accumulated depreciation of the disposed asset was $12,630. The plant acquisition was for cash.

Requirements

1.

Prepare the 2016 statement of cash flows by the direct method.

2.

How will what you learned in this problem help you evaluate an investment?

Four Seasons, Inc.
Income Statement
Year Ended December 31, 2016
Sales Revenue		$444,000
Cost of Goods Sold		203,200
Gross Profit		240,800
Operating Expenses:
Salaries Expense	$71,400
Depreciation ExpensePlant Assets	14,500
Other Operating Expenses	10,300
Total Operating Expenses		96,200
Operating Income		144,600
Other Revenues and (Expenses):
Interest Revenue	8,500
Interest Expense	-21,400
Total Other Revenues and (Expenses)		-12,900
Net Income Before Income Taxes		131,700
Income Tax Expense		19,400
Net Income		$112,300

Four Seasons, Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
		2016	2015
Assets
Current Assets:
Cash		$26,300	$15,800
Accounts Receivable		26,600	24,900
Merchandise Inventory		79,500	91,500
Long-term Assets:
Plant Assets		122,290	102,220
Accumulated DepreciationPlant Assets		-16,390	-14,520
Land		35,300	11,000
Total Assets		$273,600	$230,900
Liabilities
Current Liabilities:
Accounts Payable		$34,900	$30,400
Accrued Liabilities		28,900	30,200
Long-term Liabilities:
Notes Payable		79,000	103,000
Total Liabilities		142,800	163,600
Stockholders' Equity
Common Stock, no par		88,000	64,100
Retained Earnings		42,800	3,200
Total Stockholders' Equity		130,800	67,300
Total Liabilities and Stockholders' Equity		$273,600	$230,900