(SCF Case Study) Jane Smith, a Bossier Athens Corporation's accountant, prepared the following cash flow statement: BOSSIER ATHENS CORPORATION STATEMENT OF SOURCES AND APPLICATION OF CASH FOR THE YEAR ENDED SEPTEMBER 30, 2019 Sources of cash Net income $ 26,000 Depreciation expense 45,000 Increase in long-term debt 150,000 Changes in current receivables and inventories, less current Liabilities (excluding current maturities of long-term debt) 22,000 $243,000 Application of cash Cash dividends $ 50,000 Expenditure for property, plant, and equipment 240,000 Investments and other uses 30,000 Change in cash (77,000) $243,000 The following additional information relating to Bossier Athens Corporation is available for the year ended September 30, 2019. 1. Salaries expense attributable to stock option plans was $21,000 for the year. 2. Cash Expenditures for property, plant, and equipment $250,000 Proceeds from retirements of property, plant, and equipment 10,000 Net cash expenditures $240,000 3. A stock dividend of 20,000 shares of Bossier Athens Corporation common stock was distributed on May 22, 2019, when the per share market price was $8 and par value was $0.5. 4. On June 1, 2019, 15,000 shares of Bossier Athens Corporation common stock were issued in exchange for 3,000 shares of preferred stock. The market price for the common stock at the time was $6 per share, 5. Increase in long-term debt $620,000 Less: Redemption of debt 470,000 Net increase $150,000 In recent years, Bossier Athens Corporation has experienced cash flow problems resulting from the upgrade of factory equipment, the unexpected increase in accounts receivables and inventories, and the debt financing on the manufacturing facility. The company has attempted to borrow cash from national and local banks but failed miserably due to the poor performance of the company in recent years. One banking agent said that one particular reason for her not able to lending cash to Bossier Athens Corporation it that the firm could not maintain a positive cash position generated from cash flows from operations in recent years. Thinking about the issue and the banker's remarks, Jane Smith came up with an idea: With a statement of cash flows that shows stronger cash inflows from operations, Bossier Athens Corporation might be able to impress banks for a brighter future of the firm and thus receive financing from the banks. To "wiggle" cash flows, Bossier Athens Corporation can sell its A/R balance and liquidate its raw materials inventories. These business transactions are rather costly to the firm, but think about the bright side - they would generate lots of cash so that the operating cash flow would appear to be "prettier". REQUIRED: (a) In general, what are the objectives of a statement of the type shown above for Bossier Athens Corporation? Explain. (25 points) (b) Identify the weaknesses in the form and format of Bossier Athens Corporation's statement of cash flows without reference to the additional information. (Assume adoption of the indirect method.) (25 points) (c) For each of the five items of additional information for the statement of cash flows, indicate the preferable treatment and explain why the suggested treatment is preferable. (25 points) (d) What are the ethical issues related to Jane Smith's idea? (25 points) Use your own words. You are not required to provide any calculations. Nevertheless, calculations are also welcome. R