Shepard Company has not yet prepared a formal statement of cash flows for 2017. Comparative balance sheets as of December 31, 2017 and 2016, and a statement of income and retained earn-ings for the year ended December 31, 2017, appear below and on the following page.
Shepard Company
Balance Sheet
December 31
(thousands omitted)
Shepard Company
Statement of Income and Retained Earnings
For the Year Ended December 31, 2017
(thousands omitted)
Required
1. For purposes of a statement of cash flows, are the U.S. Treasury bills cash equivalents? If not, how should they be classified? Explain your answers.
2. Prepare a statement of cash flows for 2017 using the direct method in the Operating Activ-ities section.
