Effects of Changes in Inventory and Accounts Payable Balances on Statement of Cash Flows Copeland Antiques reported a net loss of $33,200 for the year ended December 31, 2008. The following items were included on Copeland’s balance sheets at December 31, 2008 and 2007:

Copeland uses the indirect method to prepare its statement of cash flows. Copeland does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2008.
Required 1. Prepare Copeland’s 2008 statement of cash flows.
2. Draft a brief memo to the president explaining why cash increased during such an unprofitable year.

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Cash Trade accounts payable Inventories 12/31/08 $ 65,300 123,900 192,600 12/31/07 $ 46,100 93,700 214,800