Examine the information presented below for Perfect Fit Clothing Stores first year of business.

The Vice President of Sales claims the organization had a fabulous first year based on the SCF. The Controller disagrees noting this year was an operating failure and the statement was incorrectly presented with the $109,000 not representing an actual increase in cash.

Who do you agree with?

Why is the other person wrong?

Perfect Fit Clothing Statement of Cash Flows For the Period Ended December 31, 2016 Sources of Cash Sale of Clothing Sale of Capital Stock Sale of Investment Depreciaiton Issuance of Not for Truck Interest on Investments 382,000 380,000 120,000 80,000 30,000 8,000 $1,000,000 Total Sources of Cash Uses of Cash Purchase of Furniture and Fixtures Purchase of Merchandise (for resale Operating Expenses (includes depreciation) Purchase of Investment Purchase of Truck with a Note Purchase of Treasury Stock Interest on Note 330,000 253,000 170,000 95,000 30,000 10,000 3,000 $891,000 Total Uses of Cash Net Increase in Cash $109,000