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1) Colorful Cat Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2017:

Colorful Cat Company

Comparative Balance Sheet

December 31, 2017 and 2016

	2017	2016	Increase (Decrease)
Cash	$33,000	$13,000	$20,000
Accounts Receivable	29,000	36,000	(7,000)
Merchandise Inventory	56,000	29,000	27,000
Plant and Equipment, net	126,000	92,000	34,000
Total Assets	$244,000	$170,000	$74,000
Accounts Payable	$9,000	$13,000	$(4,000)
Accrued Liabilities	7,000	3,000	4,000
Long-term Notes Payable	70,000	79,000	(9,000)
Total Liabilities	$86,000	$95,000	$(9,000)
Common Stock	$55,000	$3,000	$52,000
Retained Earnings	115,000	78,000	37,000
Treasury Stock	(12,000)	(6,000)	(6,000)
Total Stockholders' Equity	$158,000	$75,000	$83,000
Total Liabilities and Stockholders' Equity	$244,000	$170,000	$74,000

Colorful Cat Company

Income Statement

Year Ended December 31, 2017

Sales Revenue	$291,300
Interest Revenue	1,000
Gain on Sale of Plant Assets	6,000
Total Revenues and Gains		$298,300
Cost of Goods Sold	145,000
Salaries and Wages Expense	49,000
Depreciation ExpensePlant Assets	16,000
Other Operating Expense	25,000
Interest Expense	3,500
Income Tax Expense	7,800
Total Expenses		246,300
Net Income		$52,000

Colorful Cat Company

Statement of Retained Earnings

Year Ended December 31, 2017

Retained Earnings, January 1, 2017	$78,000
Add: Net income	52,000
Less: Dividends	15,000
Retained Earnings, December 31, 2017	$115,000

Prepare the operating activities section of the statement of cash flows, using the direct method.

Accounts Receivable beginning balance xx

Add: Sales Revenue xx

Less: Accounts Receivable ending balance (xx)

Collections from Customers xx

Merchandise Inventory, ending balance xx

Add: Cost of Goods Sold xx

Less: Merchandise Inventory, beginning balance (xx)

Purchases xx

Add: Accounts Payable, beginning balance xx

Less: Accounts Payable, ending balance (xx)

Cash Paid for Merchandise Inventory $xx

Accrued Liabilities, beginning balance xx

Add: Other Operating Expenses xx

Less: Accrued Liabilities, ending balance (xx)

Cash Paid for Other Operating Expenses $xx

Total Cash Payments $xx

Colorful Cat Company

Statement of Cash Flows (Partial)

Year Ended December 31, 2017

Cash Flows from Operating Activities:

Receipts

Collections from Customers $xx

Interest Received xx

Total Cash Receipts $xx

Payments

To Suppliers (xx)

To Employees (xx)

For Interest (xx)

For Income tax (xx)

Total Cash Payments (xx)

Net Cash Provided by Operating Activities $xx

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