(Indirect SCF) Seneca Corporation has contracted with you to prepare a statement of cash flows. — The controller has provided the following information.

Instructions

(a) Use the indirect method to analyze the above information and prepare a statement of cash flows for Seneca. Flood damage is unusual and infrequent in that part of the country.

(b) What would you expect to observe in the operating, investing, and financing sections of a statement of cash flows of:
(1) a severely financially troubled firm?
(2) a recently formed firm which is experiencing rapid growth?

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December 31 2007 2006 Cash $ 43,500 $13,000 Accounts receivable 12,250 10,000 Inventory 12,000 10,000 Investments Building Equipment Copyright -0- -0- 3,000 29,750 35,000 20,000 5,000 5,250 Totals $107,750 $91,000 Allowance for doubtful accounts Accumulated depreciation on equipment $ 3,000 $ 4,500 2,000 4,500 Accumulated depreciation on building Accounts payable -0- 6,000 5,000 4,000 Dividends payable Notes payable, short-term (nontrade) Long-term notes payable Common stock Retained earnings -0- 5,000 3,000 4,000 36,000 25,000 38,000 33,000 20,750 5,000 $107,750 $91,000