12. [Sale of receivables; cash flow effects] The following footnote appeared in Arkla Inc.'s March 31, 1995 10-Q in- terim report Under a March 1994 agreement (the "Agreement"), the Company sells an undivided interest (currently limited to a maximum of $235 million) in a designated pool of accounts receivable with limited recourse The Company has retained servicing responsibility under the program. for which it is paid a fee which does not differ matenally from a normal servicing fee. Total receivables sold under the Agreement but not yet collected were approximately $1672 million. $192.8 million and $1187 million, re- spectively. at March 31, 1995, December 31, 1994 and March 31. 1994, which amounts have been deducted from "Accounts and notes receivable" in the accompanying Consolidated Balance Sheet and. at March 31, 1995. $429 million of the Company's remaming receivables were collateral for receivables which had been sold. Dur- ing the three months ended March 31, 1995 and 1994, the Company experienced cash outflows of $25 6 million and $107 7 million, respectively, under the program In accor- dance with authoritative accounting guidelines, cash flows related to these sales of accounts receivable are included in the accompanying Statement of Consolidated Cash Flows within the category. "Cash flows from operating activities."

a. Explain Arkla's statement that it experienced a cash outflow of $25.6 million during the three months ended March 31. 1995.

b. State the amount of receivables sold but uncollected at De- cember 31, 1993.

c. Compute the appropriate adjustments (for receivables sold) to Arkla's CFO for the quarters ended. (i) March 31, 1995 (ii) March 31, 1994