Statement of Cash Flows: [5532]

Balance Sheets Starting Ending

Cash $560 $100

Accounts Receivable 900 500
Supplies Inventory 600 700
Prepaid Insurance 200 100
Prepaid Salaries 400 600
Prepaid Rent 500 300
Property, Plant and Equipment 3,000 4,000
(Acc. Depr.) (660) (460)
Investments 400 700
Total Assets $5,900 $6,540

Accounts Payable $600 $500

Unearned Revenues 900 740
Salaries Payable 300 700
Notes Payable 3,000 3,000
Total Liabilities $4,800 $4,940

Contributed Capital $100 $300

Retained Earnings 1,000 1,300
Total Owners’ Equity $1,100 $1,600

Total Liab. & Owners’ Equity $5,900 $6,540

Income Statement for the Year Ended December 31:

Sales $1,900
Gain on Sale of Investment 100
Gain on Sale of PPE 600
Total Revenues and Gains $2,600

Expenses:
Salaries Expense $600
Supplies Expense 300
Insurance Expense 100
Rent Expense 500
Depreciation Expense 100
Interest Expense 200 1,800

Income Before Income Taxes $800

Tax Expense 300
Net Income $500

Additional Information:
1. The firm sold PPE for $1,000 cash. The original cost of the PPE was $700. $300 of depreciation had
been taken on the asset up to the time of its sale.
2. The firm declared and paid a $200 cash dividend to stockholders.
3. The owners invested another $200 in the firm.
4. The firm sold investments for $100 more than their $200 original cost.

Required: Determine the proper sources or uses of cash from each of these three activities: Operations,
Investing and Financing.