Presented below is selected financial information for Linus Corporation for December 31, 2007.

Inventory $ 25,000 Cash paid to purchase equipment $ 10,000 Cash paid to suppliers 108,000 Equipment 40,000 Building 200,000 Revenues 100,000 Common stock 50,000 Cash received from customers 137,000 Cash dividends paid 7,000 Cash received from issuing common stock 22,000 Instructions

(a) Determine which items should be included in a statement of cash flows and then prepare the statement for Linus Corporation.

(b) Comment on the adequacy of net cash provided by operating activities to fund the company’s investing activities and dividend payments.