Vincent Fairfield, CEO of MetroAir, sat at his desk, examining the companys latest financial statements. This just doesnt make sense to me, Vincent thought. Were reporting $1,662,015 in net income, yet our Cash balance decreased by over $350,000. With these results, I would think the Cash balance should go up by at least $1,000,000.

MetroAir Income Statement For the Year Ended December 31, 2016
Sales		$78,555,000
Cost of goods sold		58,146,480
Gross profit		20,408,520
Selling expense		5,168,505
Administrative expense		3,814,660
Salaries expense		7,408,490
Depreciation expense		1,016,835
Interest expense		625,725
Income before taxes		2,374,305
Tax expense		712,290
Net income		$1,662,015

MetroAir Balance Sheets As of December 31
		2016		2015
Cash		$266,280		$631,710
Accounts receivable, net		9,355,695		8,751,435
Inventories		9,605,580		8,206,635
Other assets		691,380		359,640
Total current assets		19,918,935		17,949,420
Machinery and equipment, net		8,142,870		9,009,705
Total assets		$28,061,805		$26,959,125
Accounts payable		$6,624,030		$6,675,210
Accrued expenses		563,371		1,023,738
Salaries payable		615,940		595,380
Interest payable		58,143		55,412
Income taxes payable		63,781		59,860
Short-term debt		2,175,000		1,950,000
Total current liabilities		10,100,265		10,359,600
Long-term debt		4,200,000		4,500,000
Total liabilities		14,300,265		14,859,600
Common stock		3,150,000		3,150,000
Retained earnings		10,611,540		8,949,525
Total stockholders equity		13,761,540		12,099,525
Total liabilities and stockholders equity		$28,061,805		$26,959,125

During the year, the company purchased equipment, issued short-term debt, and retired long-term debt.

(a1)

	Your answer is partially correct. Try again.

Prepare MetroAirs statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign, e.g. -15,000 or in parentheses, e.g. (15,000).)

MetroAir Statement of Cash Flows For the Year Ended December 31, 2016 Cash Flows from Operating Activities 1662015 Net Income / (Loss) Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation 10168351 Increase in Accounts Receivable -604260 Increase in Inventories -1398945 Increase in Other Assets -331740 Decrease in Accounts Payable -51180 Decrease in Accrued Expenses -4603671 Increase in Salaries Payable 20560 Increase in Interest Payable 2731 Proceeds from Short-term Borrowing 225000 -1577445 Cash Flows from Operating Activities 84570 Cash Flows from Investing Activities Purchase of Equipment -150000 Cash Flows from Operating Activities 84570 Cash Flows from Investing Activities Purchase of Equipment -150000 Cash Flows from Investing Activities -150000 Cash Flows from Financing Activities Repayment of Long-term Debt -300000 Cash Flows from Financing Activities -300000 Net Increase in Cash -365430 Cash at Beginning of Period 631710 Cash at End of Period 266280