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The Extra Surplus Company's Balance Sheet for December 31, 2015 and the Income Statement for 2016 are shown below.

Extra Surplus Company
Balance Sheet
December 31, 2015
Assets
Cash	$	12,500
Accounts Receivable		6,250
Inventory		15,000
Property and Equipment, Net		25,000
	$	58,750
Liabilities and Stockholders Equity
Accounts Payable	$	12,500
Notes Payable, Long-Term		6,250
Common Stock		25,000
Retained Earnings		15,000
	$	58,750

Extra Surplus Company
Income Statement
For the Year Ended December 31, 2016
Sales	$	19,500
Cost of Goods Sold		4,500
Salaries and Wage Expense		4,500
Interest Expense		1,500
Other Expenses		750
Net Income	$	8,250

Additional data:

Sales were $19,500; $12,000 in cash was received from customers.

Bought new land for cash, $15,000.

Sold other land for its book value of $7,500.

Paid $1,500 principal on the long-term note payable and $1,500 in interest.

Issued new shares of stock for $15,000 cash.

Cash dividends of $2,000 were declared and paid to stockholders.

Paid $8,500 on accounts payable.

No inventory purchases were made; other expenses were incurred on account.

All wages were paid in cash.

Other expenses were on account.

Required:

a.	Prepare a balance sheet at December 31, 2016.

b.	Prepare the statement of cash flows using the direct method. (Enter any deductions and cash outflows as a negative value.)

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