| Presented below are the 2016 income statement and comparative balance sheets for Santana Industries. |
| SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2016 ($ in thousands) |
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| Sales revenue | $ | 14,250 | ||
| Service revenue | 3,400 | |||
| Total revenue | $ | 17,650 | ||
| Operating expenses: | ||||
| Cost of goods sold | 7,200 | |||
| Selling | 2,400 | |||
| General and administrative | 1,500 | |||
| Total operating expenses | 11,100 | |||
| Operating income | 6,550 | |||
| Interest expense | 200 | |||
| Income before income taxes | 6,350 | |||
| Income tax expense | 2,500 | |||
| Net income | $ | 3,850 | ||
| Balance Sheet Information ($ in thousands) | Dec. 31, 2016 |
Dec. 31, 2015 |
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| Assets: | ||||||
| Cash | $ | 7,350 | $ | 2,200 | ||
| Accounts receivable | 2,500 | 2,200 | ||||
| Inventory | 4,000 | 3,000 | ||||
| Prepaid rent | 150 | 300 | ||||
| Plant and equipment | 14,500 | 12,000 | ||||
| Less: Accumulated depreciation | (5,100 | ) | (4,500 | ) | ||
| Total assets | $ | 23,400 | $ | 15,200 | ||
| Liabilities and Shareholders’ Equity: | ||||||
| Accounts payable | $ | 1,400 | $ | 1,100 | ||
| Interest payable | 100 | 0 | ||||
| Deferred service revenue | 800 | 600 | ||||
| Income taxes payable | 550 | 800 | ||||
| Loan payable (due 12/31/2018) | 5,000 | 0 | ||||
| Common stock | 10,000 | 10,000 | ||||
| Retained earnings | 5,550 | 2,700 | ||||
| Total liabilities and shareholders’ equity | $ | 23,400 | $ | 15,200 | ||
| Additional information for the 2016 fiscal year ($ in thousands): | |
| 1. | Cash dividends of $1,000 were declared and paid. |
| 2. | Equipment costing $4,000 was purchased with cash. |
| 3. | Equipment with a book value of $500 (cost of $1,500 less accumulated depreciation of $1,000) was sold for $500. |
| 4. | Depreciation of $1,600 is included in operating expenses. |
| Required: |
| Prepare Santana Industries’ 2016 statement of cash flows, using the indirect method to present cash flows from operating activities. |
