BBB Company's balance sheet and income statement follow (attachment):

BBB COMPANY

Income Statement

For Year Ended December 31, 2011

Sales

$38,000

Operating expenses:

Depreciation expense

$ 2,800

Other operating expenses

35,000

37,800

Operating income

200

Gain on sale of land

800

Income before tax expense

1,000

Tax expense

500

Net income

$ 500

Supplemental information:

Dividends declared and paid

$ 4,350

Land sold for cash

1,800

Equipment purchased for cash

3,500

Common stock sold for cash

3,800

• a. Prepare a statement of cash flows for the year ended December 31, 2011. (Present the cash flows from operations using the indirect method.)
• b. Comment on the statement of cash flows.