Statement of cash flows$-$indirect method

Shasta Inc.

Statement of Cash Flows

For the Year Ended December $31,20$ Y$9$

Cash flows from $($used for$)$ operating activities:

Net income

$$360,000$

Adjustments to reconcile net income to net cash flows from $($used for$)$ operating activities:

Depreciation

$100,800$

Gain on sale of investments

$17,280$

Changes in current operating assets and liabilities:

Increase in accounts receivable

$27,360$

Increase in inventories

$(36,000)$

Increase in accounts payable

$(3,600)$

Decrease in accrued expenses payable

$(2,400)$

Net cash flows from operating activities

Cash flows from $($used for$)$ investing activities:

Cash received from sale of investments

Cash paid for purchase of land

Cash paid for purchase of equipment

Net cash flows used for investing activities

Cash flows from $($used for$)$ financing activities:

Cash received from sale of common stock

Cash paid for dividends

Net cash flows from financing activities

Net increase in cash

Cash balance, December $31,20$ Y$9$

Cash balance, January $1,20Y9$

a$.$ Answer the following questions. Use your answers to help you in locating errors for the above statement of cash flows.

Depreciation should be added to net income.

Gain on sale of investments should be added to net income.

Increases in accounts payable should be deducted from net income.

Increases in accounts receivable should be added to net income.

Cash paid for property, plant, and equipment should be deducted under investing.

Cash received from sale of common stock should be added under financing.

b$.$ Enter the corrected amounts below. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Net cash flows from operating activities

Net cash flows used for investing activities

Net cash flows from financing activities