DOWLING COMPANY Statement of Cash Flows For the year ended December 31, 2010 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Amortization of Patents Gain on sale of investments Changes in current operating assets and liabilities Decrease in accounts receivable Increase in inventories Increases in prepaid expenses Decrease in accounts payable Increase in accrued expenses payable Decrease in income taxes payable Net cash flow from operating activities Cash flow from investing activities: Cash received from sale of: Investments Land Less: Cash paid for construction of Building Net cash flow used for investing activities Cash flows from financing activities Cash received from issuing mortgage note payable Less: cash paid for dividends Net cash flow from financing activities Increase in cash Cash at the beginning of the year Cash at the end of the year Schedule of Noncash Investing and Financing Activities: Issued common stock to retire bonds payable