Starwax Surfaces specializes in making granite countertops. Anew accounting clerk has compiled the following information to prepare the statement of cash flows for the year ended December 31, 2021. 3 6 Net income for the year was $125,400. 7 Depreciation expense was $17,520. 8 Equipment was sold for a gain of $14,620. Cash proceeds from the sale were $29,540. 9 Equipment was purchased for $185,400. 10 Dividends of $42,300 were paid. 11 Accounts receivable increased by $26,450. 12 Merchandise inventory decreased by $28,560. 13 Accounts payable increased by $35,860. 14 Notes payable increased by $60,000. 15 Shares were sold for $55,000 (also their book value). 16 Cash balance on January 1, 2021, was $124,500. 17 Cash balance on December 31, 2021, was $207,610. 18 19 The statement of cash flows the accounting clerk prepared is shown below. 20 21 Starwax Surfaces 22 Statement of Cash Flows 23 For the Year Ended December 31, 2021 24 Cash Flow from Operating Activities 25 Net Income $125,400 Adjustments to Reconcile Net Income to Net Cash 27 Provided (Used) by Operating Activities 28 Depreciation Expense 17,520 29 Changes in Operating Assets and Liabilities 30 Increase in Accounts Receivable 26,450 31 naccease in Marchandise louanto 2560 789 26 31 Decrease in Merchandise Inventory 28,560 B2 Increase in Accounts Payable 35,860 33 Sale of Equipment 29,540 34 Purchase of Equipment 185,400 35 Net Cash Provided (Used) by Operating Activities 20,810 $6 37 Cash Flow from Investing Activities 38 Proceeds from Notes Payable 60,000 39 Net Cash Provided (Used) by Investing Activities 60,000 10 11 Cash Flow from Financing Activities 12 Payment of Cash Dividend 42,300 13 Proceeds from Issuance of Common Shares 55,000 14 Net Cash Provided (Used) by Financing Activities 12,700 5 16 Net Increase (Decrease) in Cash 93,510 17 Cash at the Beginning of the Year 124,500 18 Cash at the End of the Year $218,010 9 50 $1 a) Identify the problems with the statement of cash flows that the accounting clerk prepared. 52 3 34 5 56 37 e SU 51 a) Identify the problems with the statement of cash flows that the accounting clerk prepared. 52 53 54 55 56 57 58 59 60 3 61 b) Prepare a corrected statement of cash flows. 62 63 CA