Bernadette Adams, the president of Adams Print Gallery, Inc., is examining the income statement for 2018, which has just been handed to her by her accountant, Jason Rosenberg, CPA. After looking at the statement, Ms. Adams says to Mr. Rosenberg, Jason, the statement seems to be well done, but what I need to know is why I don't have enough cash to pay my bills this month. You show that I have earned $60,000 in 2018, but I only have $12,000 in the bank. I know I bought a building on a mortgage and paid a cash dividend of $24,000, but what else is going on?" Mr. Rosenberg replies, To answer your question, Bernadette, we have to look at comparative balance sheets and prepare another type of statement. Here, take a look at these balance sheets.' The income statement and comparative balance sheets handed to Ms. Adams follow. Adams Print Gallery, Inc. Income Statement For the Year Ended 12/31/2018 $442,000 254,000 $188,000 Net Sales Cost of Goods Sold Gross Margin Operating Expenses (including Depreciation) Expense of $10,000 Operating Income Other Income (Expense) Interest ($12,000) Income Before Income Taxes Income Taxes Net Income 102,000 $86,000 -12,000 $74,000 14,000 $60,000 Additional Information taken from the Company's Records: Building purchased for $200,000 with a Mortgage of $200,000 b. Dividends paid of $24,000 a Statement of Cash Flows Adams Print Gallery, Inc. Comparative Balance Sheets December 31, 2018 and 2017 Increase Change or Decrease Source or Use 2018 2017 Current Assets Cash Accounts Receivable (net) Inventory Prepaid Expenses Total Current Assets $12,000 89,000 120,000 5,000 $20,000 73,000 90,000 7,000 0 Investments Buildings Accumulated Depreciation, Buildings Total Assets 200,000 (10,000) $416,000 0 $190,000 $37,000 $48,000 Liabilities Current Liabilities Accounts Payable Accured Liabilities Income Taxes Payable Total Current Liabilities Long-Term Liabilities Mortgage Payable Total Liabilities 3,000 $40,000 2,000 $50,000 200,000 $240,000 0 $50,000 100,000 100,000 Stockholders' Equity Common Stock Paid - in Capital in Excess of Par Value Retained Earnings Total Liabilities and Stockholders' Equity 76,000 $416,000 40,000 $190,000 Step 1: Compute the change for each Balance Sheet account. Step 2: Indicate whether it is an Increase or a Decrease in each account. Step 3: Does the change represents a Source of Cash Flows or a Use of Cash Flows in each of the accounts. Statement of Cash Flows 56. Which statement does Mr. Rosenberg have in mind when he refers to "another type of statement"? Questions 57 through 75. From the information given in the Income Statement and Comparative Balance Sheet, use the indirect method to prepare the additional statement. Adams Print Gallery, Inc. # 57. For the Year Ended 12/31/18 Cash Flow from Operating Activities Net Income Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities Depreciation Expense, Buildings Changes in Current Assets and Current Liabilities Increase or Decrease in Accounts Receivable Increase or Decrease in Inventory Increase or Decrease in Prepaid Expenses Increase or Decrease in Accounts Payable Increase or Decrease in Income Taxes Payable Net Cash Flows from Operations Cash Flow from Investing Activities Sale of Long-Term Investments Purchase of Building Net Cash Flows from Investing Activities Cash Flow from Financing Activities Increase or Decrease in Mortgage Payable Dividends Paid Net Cash Flows from Financing Activities Net Increase (Decrease) in Cash Cash at Beginning of Year Cash at End of Year 76. Adams Print Gallery, Inc. has a cash problem despite profitable operations. Why