The comparative balance sheet of Middle Movie Theatre Company at March 31, 2014, reported the following:

		March 31,
		2014	2013
Current assets:
Cash and cash equivalents. . . . . .		$14,400	$15,000
Accounts receivable. . . . . . . . . . .		14,700	21,400
Inventories. . . . . . . . . . . . . . . . . .		63,000	60,800
Prepaid expenses. . . . . . . . . . . . .		3,000	2,300
Current liabilities:
Accounts payable. . . . . . . . . . . . .		57,700	55,600
Accrued liabilities. . . . . . . . . . . . .		14,700	17,600
Income tax payable. . . . . . . . . . . .		14,400	10,200

Middles transactions during the year ended March 31, 2014 included the following:

Acquisition of land by		Sale of long-term investment. . . . . . . .	$13,800
issuing note payable. . . . . . .	$109,000	Depreciation expense. . . . . . . . . . . . .	15,200
Payment of cash dividend. . . . . .	29,000	Cash purchase of building. . . . . . . . . .	45,000
Cash purchase of equipment. . . .	78,800	Net income. . . . . . . . . . . . . . . . . . . .	56,000
Issuance of long-term note		Issuance of common shares for cash. .	11,000
payable to borrow cash. . . . .	49,000	Stock dividend. . . . . . . . . . . . . . . . . .	18,000

Requirement 1. Prepare Middle Movie Theatre Company's statement of cash flows for the year ended March 31, 2014, using the indirect method to report cash flows from operating activities. Report non-cash investing and financing activities in an accompanying schedule.

Start by completing the cash flows from operating activities. Then, continue with completing the investing and financing activities sections. Finally, determine the net increase (decrease) in cash. (Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in a statement of cash flows.)

	Middle Movie Theatre Company
	Statement of Cash Flows
	For the Year Ended March 31, 2014
	Cash flows from operating activities:
	Net income
	Adjustments to reconcile net income to
	net cash provided by operating activities:
	Depreciation
	Decrease in accounts receivable
	Increase in inventories
	Increase in prepaid expenses
	Increase in accounts payable
	Decrease in accrued liabilities
	Increase in income tax payable
	Net cash provided by operating activities
	Cash flows from investing activities:
	Purchase of equipment
	Purchase of building
	Sale of long-term investment
	Net cash used for investing activities

	Cash flows from financing activities:
	Issuance of long-term note payable
	Issuance of common shares
	Payment of cash dividends
	Net cash provided by financing activities
	Net increase (decrease) in cash
	Cash balance, March 31, 2013
	Cash balance, March 31, 2014
	Non-cash investing and financing activities:
	Acquisition of land by issuing
	note payable

Requirement 2. Evaluate Middle's cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.

Middle Movie Theatre cash flow looks STRONG / WEAK.

Operations ARE A DRAIN ON CASH FLOWS / ARE THE MAIN SOURCE OF CASH.

The company is INVESTING IN NEW ASSETS / SELLING PLANT ASSETS TO GENERATE CASH.

The financing CASH INFLOW / CASH OUTFLOW appears reasonable.