Statement of Cash Flows

The following statement of cash flows for Shasta Inc. was not correctly prepared. List the errors you find on the statement of cash flows. The cash balance at the beginning of the year was $$240,000.$ All other amounts are correct, except the cash balance at the end of the year.

Shasta Inc.

Statement of Cash Flows

For the Year Ended December $31,20Y9$

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

Gain on sale of investments

Changes in current operating assets and liabilities:

Increase in accounts receivable

Increase in inventories

$100,800$

$17,280$

Increase in accounts payable

Decrease in accrued expenses payable

Net cash flows from operating activities

$$463,440$

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

Cash received from sale of investments

$$240,000$

Cash paid for purchase of land

$(259,200)$

Cash paid for purchase of equipment

Net cash flows used for investing activities

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

$(415,200)$

Cash received from issuing common stock

Cash dividends

$(432,000{)}_{?}$

$(415,200)$

Net cash flows from financing activities

Net increase in cash

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

Cash balance, January $1,20Yg$

$\backslash$table$[[$$$312,000$

b$.$ Enter the corrected amounts below. Use the minus sign to indicate cash outflows, 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

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Check My Work

Review the correct treatment of cash flow from operating, investing, and financing activities. Is cash being paid or received? Recall how increases and decreases in current operating assets and liabilities affect the cash flow of a business. Is the math correct in the statement?

c$.$ Prepare a corrected statement of cash flows. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

SHASTA INC.

Statement of Cash Flows

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

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

Cash received from issuing common stock $x$

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

Decrease in accounts receivable gradx

Decrease in inventories $x$

Channes in current nneratinn ascots and liahilities.