Preparing and interpreting the statement of cash flows. Irish Paper Company (Irish) manufactures and markets various paper products around the world. Paper manufacturing is a capital-intensive activity. A firm that does not adequately use its manufacturing capacity will experience poor operating performance. Sales of paper products tend to be cyclical with general economic conditions, although consumer paper products are less cyclical than business paper products.

Exhibit 13.15 presents comparative income statements, and Exhibit 13.16 presents comparative balance sheets for Irish Paper Company for Year 9, Year 10, and Year 11. Additional information appears below (amounts in millions).

(2) Depreciation expense was \(\$ 306\) million in Year 9, \$346 million in Year 10, and \(\$ 353\) million in Year 11.
(3) During Year 9, Irish purchased outstanding stock warrants for \$201 million. It recorded the transaction by debiting the Common Stock account.
(4) During Year 9 , Irish sold timberlands at a gain. It received cash of \(\$ 5\) million and a long-term note receivable for \(\$ 220\) million, which it includes in Other Assets on the balance sheet.
(5) In addition to the cash expenditures presented above, Irish acquired property, plant, and equipment during Year 10 costing \(\$ 221\) million by assuming a longterm mortgage payable.
(6) During Year 11, Irish resold treasury stock for an amount greater than its cost.
(7) Changes in Other Assets are investing activities.

a. Prepare T-account work sheets for a statement of cash flows for Irish for Year 9, Year 10, and Year 11.

b. Prepare a comparative statement of cash flows for Irish for Year 9, Year 10, and Year 11 .

c. Comment on the pattern of cash flows from operating, investing, and financing activities for each of the three years.

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(1) Cash Flow Information Year 9 Year 10 Year 11 Investments in Affiliates" $ (92) $ 86 $ (13) Expenditures on Property, Plant, and Equipment (775) (931) (315) Long-term Debt Issued 449 890 36 "Excludes earnings and dividends.