P23-8.

(SCFDirect and Indirect Methods)

(LO 2, 4) Comparative balance sheet accounts of Sharpe Company are presented below.

SHARPE COMPANY COMPARATIVE BALANCE SHEET ACCOUNTS AS OF DECEMBER 31
Debit Balances	2017	2016
Cash	$?70,000	$?51,000
Accounts Receivable	155,000	130,000
Inventory	75,000	61,000
Debt investments (available-for-sale)	55,000	85,000
Equipment	70,000	48,000
Buildings	145,000	145,000
Land	??40,000	??25,000
Totals	$610,000	$545,000
Credit Balances
Allowance for Doubtful Accounts	$?10,000	$??8,000
Accumulated DepreciationEquipment	21,000	14,000
Accumulated DepreciationBuildings	37,000	28,000
Accounts Payable	66,000	60,000
Income Taxes Payable	12,000	10,000
Long-Term Notes Payable	62,000	70,000
Common Stock	310,000	260,000
Retained Earnings	??92,000	??95,000
Totals	$610,000	$545,000

Additional data:

1.Equipment that cost $10,000 and was 60% depreciated was sold in 2017.

2.Cash dividends were declared and paid during the year.

3.Common stock was issued in exchange for land.

4.Debt investments that cost $35,000 were sold during the year.

5.There were no write-offs of uncollectible accounts during the year.

Sharpe's 2017 income statement is as follows.

Sales revenue		$950,000
Less: Cost of goods sold		?600,000
Gross profit		?350,000
Less: Operating expenses (includes depreciation expense and bad debt expense)		?250,000
Income from operations		?100,000
Other revenues and expenses
Gain on sale of investments	$15,000?
Loss on sale of equipment	?(3,000)	??12,000
Income before taxes		?112,000
Income taxes		??45,000
Net income		$?67,000

Instructions

(a)

Compute net cash provided by operating activities under the direct method.

(b)

Prepare a statement of cash flows using the indirect method.