P23-1B (SCF—Indirect Method) The following are Sanibel Corp.’s comparative balance sheet accounts at December 31, 2017 and 2016, with a column showing the increase (decrease) from 2016 to 2017.

Additional information:

1. On December 31, 2016, Sanibel acquired 25% of Island Co.’s common stock for $420,000. On that date, the carrying value of Island’s assets and liabilities, which approximated their fair values, was $1,680,000. Island reported income of $220,000 for the year ended December 31, 2017. No dividend was paid on Island’s common stock during the year.

2. During 2016, Sanibel loaned $500,000 to POI Co., an unrelated company. POI made the first semi-annual principal repayment of $50,000, plus interest at 10%, on December 31, 2016. POI is current on the loan as of December 31, 2017.

3. On January 2, 2017, Sanibel sold equipment costing $100,000, with a carrying amount of $31,000, for $20,000 cash.

4. On December 31, 2017, Sanibel entered into a capital lease for a new factory. The present value of the annual rental payments is $850,000, which equals the fair value of the building. Sanibel made the first rental payment of $120,000 when due on January 2, 2018.

5. Net income for 2017 was $285,000.

6. Sanibel declared and paid cash dividends for 2017 and 2016 as follows.

Instructions

Prepare a statement of cash flows for Sanibel Corp. for the year ended December 31, 2017, using the indirect method.