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STATEMENT OF CASH FLOWS:  REPORTING THE EFFECTS OF OPERATING, INVESTING, AND FINANCING ACTIVITIES ON CASH FLOWS   T4-X

4.17(Southwest Airlines; preparing a statement of cash flows from changes in balance sheet accounts.)

a.SOUTHWEST AIRLINES

Statement of Cash Flows

For the Year

(Amounts in Thousands)

Operations:

Net Income$474,378

Additions:

Depreciation Expense264,088

Decrease in Accounts Receivable15,351

Increase in Other Current Liabilities114,596

Subtractions:

Increase in Inventories(15,117)

Increase in Prepayments(16,776)

Decrease in Accounts Payable(660)

Cash Flow from Operations$835,860

Investing:

Acquisition of Property, Plant and Equipment$(1,134,644)

Decrease in Other Non-operating Assets(8,711)

Cash Flow from Investing$(1,143,355)

Financing:

Increase in Long-term Debt$244,285

Increase in Common Stock96,991

Payment of Dividends(133,499)

Increase in Non-operating Liabilities140,026

Cash Flow from Financing$347,803

Net Change in Cash$40,308

Cash, Beginning of Year378,511

Cash, End of Year$418,819

b.Cash flow from operations exceeds net income primarily because of the addback for depreciation expense and increases in other current liabilities.  Cash flow from operations was insufficient to finance acquisitions of property, plant and

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