5 6 7 SATELLITE 2010 Worksheet for a Statement of Cash Flows For the Year Ended December 31, 2007 8 9 10 Balance sheet effects: 11 12 Assets 13 Cash and cash equivalents Effects of Transactions Beginning Balance Debit Changes Credit Ending Changes Balance (x) 14 Accounts receivable 15 Plant and equipment (net of 16 accumulated depreciation) (2) 17 Totals 18 19 Liabilities & Stockholders' Equity 20 Note payable (short-term) (7) 21 Accounts payable (4) 22 Accrued expenses payable 23 Notes payable (long-term) (6) 24 Capital stock (no par value) (8) 25 Retained earnings (1). 26 Totals 27 28 29 Cash effects: Sources Uses 30 Operating activities: 31 Net income 32 Depreciation expense 33 Increase in accounts receivable (3) 34 Increase in accounts payable 35 36 37 38 Decrease in accrued expenses payable Investing activities: Cash paid for plant assets (5) (6) 39 Financing activities: 40 Short-term borrowing 41 Issuance of capital stock 42 Subtotals 43 Net decrease in cash (x), 44 Totals 45 46 47 48 49 50 51 52 53 54 55 56 57 SATELLITE 2010 Statement of Cash Flows For the Year Ended December 31, 2007 Cash flows from operating activities: Net income Add: Depreciation expense Increase in accounts payable Subtotal Less: Increase in accounts receivable Decrease in accrued expenses payable 58 Net cash flow provided by (used in) operating activities 59 60 Cash flows from investing activities: 61 62 63 64 Cash paid to acquire plant assets Net cash used for investing activities Cash flows from financing activities: 65 Short-term borrowing from banks 66 Issuance of capital stock 67 Net cash provided by financing activities 68 69 Net increase (decrease) in cash 70 Cash and equivalents, December 31, 2006 71 Cash and equivalents, December 31, 2007 72 73 74 75 76 77 Supplementary Schedule: Noncash Investing and Financing Activities Purchases of plant assets Less: Portion financed by issuing long-term notes payable 78 Cash paid to acquire plant assets 79 80 81 82 c. Briefly explain how operating can be a net use of cash when the company is operating so profitably. 83 84