Question

The comparative balance sheet for SeawaySeaway Travel​ Services, Inc., for December​ 31, 2017 and 2016 is as​ follows:

Seaway Travel Services, Inc.
Comparative Balance Sheets
December 31, 2017 and 2016
Assets		2017	2016
Current assets:
Cash		$45,000	$19,000
Accounts receivable		78,000	82,000
Inventory		63,000	22,000
Prepaid insurance		9,000	10,000
Total current assets		$195,000	$133,000
Land		$110,000	$115,000
Equipment		78,000	61,000
Less: Accumulated depreciation		(14,000)	(9,000)
Total assets		$369,000	$300,000
Liabilities
Current liabilities:
Accounts payable		$23,000	$35,000
Wages payable		34,000	25,000
Interest payable		20,000	18,000
Income taxes payable		8,000	5,000
Total current liabilities		$85,000	$83,000
Notes payable (long-term)		94,000	84,000
Total liabilities		$179,000	$167,000
Stockholders' equity
Common stock		$147,000	$114,000
Retained earnings		43,000	19,000
Total stockholders' equity		$190,000	$133,000
Total liabilities and equity		$369,000	$300,000

The following information is taken from the records of SeawaySeaway Travel​ Services, Inc.:

a.	Land was sold for $ 1 comma 500$1,500.
b.	Equipment was purchased for cash.
c.	There were no disposals of equipment during the year.
d.	The common stock was issued for cash.
e.	Net income for 20172017 was $ 33 comma 000$33,000.
f.	Cash dividends paid during the year were $ 9 comma 000$9,000.

Travel​ Services, Inc., uses the indirect method for preparing the statement of cash flows. Prepare the operating section of the statement of cash flows for

2017.

Answer 1

Preparation of Operating Section of the Statement of Cash Flows for 2017

	Amount in $
Net Income Adjustments for: Decrease in accounts receivable Increase in inventory Decrease in prepaid insurance Depreciation (14000-9000) Decrease in accounts payable Increase in wages payable Increase in interest payable	33,000 4,000 (41,000) 1,000 5,000 (12,000) 9,000 2,000
Cash flows from operating activities before tax Tax paid	1,000 (3,000)
Cash used for operating activities	(2,000)