Teresa Ramirez and Lenny Traylor are examining the following statement of cash flows for Pina Clothing Stores first year of operations.

PINA CLOTHING STORE

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JANUARY 31, 2020

Sources of cash

From sales of merchandise $ 380,000

From sale of common stock 379,000

From sale of investment 124,000

From depreciation 77,000

From issuance of note for truck 28,000

From interest on investments 7,900

Total sources of cash 995,900

Uses of cash

For purchase of fixtures and equipment 328,000

For merchandise purchased for resale 251,000

For operating expenses (including depreciation) 168,500

For purchase of investment 94,000

For purchase of truck by issuance of note 28,000

For purchase of treasury stock 11,000

For interest on note 2,800

Total uses of cash 883,300

Net Increase in Cash $ 112,600

Teresa claims that Pinas statement of cash flows is an excellent portrayal of a superb first year, with cash increasing $112,600. Lenny replies that it was not a superb first yearthat the year was an operating failure, the statement was incorrectly presented, and $112,600 is not the actual increase in cash.

Answer the following questions.

1. With whom do you agree, Teresa or Lenny? Explain your position.

2. Is the statement of cash flows in the correct format?

A. What are cash flows from Operating Activities?

B. What are cash flows from Investing Activities?

C. What are cash flows from Financing Activities?