Preparing a Statement of Cash Flows (Indirect Method)

BG Wholesalers is developing its annual financial statements at December 31, current year. The statements are complete except the statement of cash flows. The completed comparative balance sheets and income statements are summarized:

	Current Year			Prior Year
Balance Sheet at December 31
Cash	$	37,000		$	29,000
Accounts Receivable		32,000			28,000
Merchandise Inventory		41,000			38,000
Property and Equipment		132,000			111,000
Less: Accumulated Depreciation		(41,000)			(36,000)
	$	201,000		$	170,000
Accounts Payable	$	36,000		$	27,000
Wages Payable		1,200			1,400
Note Payable, Long-Term		38,000			44,000
Contributed Capital		88,600			72,600
Retained Earnings		37,200			25,000
	$	201,000		$	170,000
Income Statement for Current Year
Sales	$	120,000
Cost of Goods Sold		70,000
Other Expenses		37,800
Net Income	$	12,200

Additional data:

a. Bought equipment for cash, $21,000

b. Paid $6,000 on the long-term notes payable.

c. Issued new shares of stock for $16,000 cash.

d. No dividends were declared or payed.

e. Other expenses included depreciation, $5,000; wages, $20,000; taxes $6,000; other, $6,800.

f. Accounts payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were paid fully in cash.

Required:

1. Prepare the statement of cash flows for the year ended December 31, current year, using the indirect method.
2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash during the current year.