Statement of Cash Flows Using a Work Sheet—Indirect Method (Appendix)

Refer to all of the facts in Problem 12-3A.

Required 1. Using the format in the chapter’s appendix, prepare a statement of cash flows work sheet.

2. Prepare a statement of cash flows for 2008 using the indirect method in the Operating Activities section.

3. On the basis of your statement in (2), draft a brief memo to the president to explain why cash decreased during such a profitable year. Include in your explanation any recommendations for improving the company’s cash flow in future years.