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

4.26 continued.

b.SWAN CORPORATION

Statement of Cash Flows

For the Current Year

Operations:

Net Income$50,000

Additions:

Depreciation Expense79,000

Increase in Income Taxes Payable5,000

Subtractions:

Increase in Accounts Receivable(12,000)

Increase in Merchandise Inventories(20,000)

Decrease in Accounts Payable(25,000)

Cash Flow from Operations$77,000

Investing:

Acquisition of Property, Plant, and Equip-

ment(75,000)

Financing:

Issue of Common Stock$5,000

Retirement of Bonds(4,000)

Cash Flow from Financing1,000

Net Change in Cash$3,000

Cash, January 112,000

Cash, December 31$15,000

c.Cash flow from operations was positive and sufficient to finance acquisitions of property, plant and equipment.  The firm issued common stock to finance the retirement of long-term debt.

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