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The comparative balance sheet of Canace Products Inc. for December 31, 2016 and 2015, is shown as follows: 1 Dec. 31, 2016 Dec. 31, 2015

The comparative balance sheet of Canace Products Inc. for December 31, 2016 and 2015, is shown as follows:

1

Dec. 31, 2016

Dec. 31, 2015

2

Assets

3

Cash

$643,400.00

$679,400.00

4

Accounts receivable (net)

566,800.00

547,400.00

5

Inventories

1,011,000.00

982,800.00

6

Investments

0.00

240,000.00

7

Land

520,000.00

0.00

8

Equipment

880,000.00

680,000.00

9

Accumulated depreciation-equipment

(244,400.00)

(200,400.00)

10

Total assets

$3,376,800.00

$2,929,200.00

11

Liabilities and Stockholders Equity

12

Accounts payable (merchandise creditors)

$771,800.00

$748,400.00

13

Accrued expenses payable (operating expenses)

63,400.00

70,800.00

14

Dividends payable

8,800.00

6,400.00

15

Common stock, $2 par

56,000.00

32,000.00

16

Paid-in capital: Excess of issue price over parcommon stock

408,000.00

192,000.00

17

Retained earnings

2,068,800.00

1,879,600.00

18

Total liabilities and stockholders equity

$3,376,800.00

$2,929,200.00

The income statement for the year ended December 31, 2016, is as follows:

1

Sales

$5,980,000.00

2

Cost of merchandise sold

2,452,000.00

3

Gross profit

$3,528,000.00

4

Operating expenses:

5

Depreciation expense

$44,000.00

6

Other operating expenses

3,100,000.00

7

Total operating expenses

3,144,000.00

8

Operating income

$384,000.00

9

Other expense:

10

Loss on sale of investments

(64,000.00)

11

Income before income tax

$320,000.00

12

Income tax expense

102,800.00

13

Net income

$217,200.00

Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:

A. Equipment and land were acquired for cash.
B. There were no disposals of equipment during the year.
C. The investments were sold for $176,000 cash
D. The common stock was issued for cash.
E. There was a $28,000 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign only to indicate the net cash outflows for each section. Deduct, Less or colons (:) will automatically appear if required.

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