SDPS, Inc., provides airport transportation services in southern California. An income statement for 2009 and balance sheets for 2009 and 2008 appear below.

Additional information:
a. Vehicles with a cost of $310,000 and accumulated depreciation of $177,000 were sold for $130,000 cash. New vehicles were purchased for $425,000 cash.
b. A $25,000 principal payment on the long-term note was made during 2009.
c. No dividends were paid during 2009.

Required:
1. Prepare a statement of cash flows, using the indirect method to compute net cash flow from operating activities.
2. Explain what has been responsible for the decrease in cash.
3. Determine whether an examination of the changes in the current liability accounts suggest how SDPS financed its increase in net property, plant, and equipment during a period in which it had a substantial netloss.

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SDPS, Inc. Income Statement For the Year Ended December 31, 2009 $937,000 Less operating expenses: $278,000 229,000 Wages expense Fuel expense Maintenanoe expense Depreciation expense 138,000 215,000 943,000 $ (6,000) Income (loss) from operations Other income (expenses): Loss on sale of vehicles Interest expense $ (3,000) (14,000) Net loss SDPS, Inc. Balance Sheets December 31, 2009 and 2008 ASSETS 2009 2008 Current assets $40,000 126,000 11,000 $177,000 82,000 109,000 Accounts receivable Inventory, fuel Total current assets Property, plant, and equipment: $524,000 (174,000 Equipment, vehicles $409,000 Accumulated depreciation Net property, plant, and 350,000 $527,000 equipment 273,000 Total assets LIABILITIES AND EQUITY Current liabilities: $103,000 22,000 41,000 92,000 S 58,000 29,000 Accounts payable Wages payable Maintenance service payable Rent payable 51,000 Total current liabilities $258,000 $172,000 Long-term liabilities Long-term notes payable 100,000 Total liabilities $297,000 Common stodk $150,000 19,000 $150,000 42,000 Retained eanings 169,000 192,000 Total liabilities and equity