Use the information concerning Sharp Screen Films, Inc., provided in Problem 12-1 to fulfill the following requirements.

Data from in Problem 12-1

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows:

Required:

1. Prepare the statement of cash flows using the direct method for the year ended December 31, current year.

2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash by Sharp Screen Films during the current year.

Transcribed Image Text:

Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation Accounts payable Wages payable Note payable, long-term Common stock and additional paid-in capital Retained earnings Income statement for current year Sales Cost of goods sold Depreciation expense Other expenses Net income Current Year Prior Year $ 73,250 15,250 23,450 209,250 (57,450) $263,750 $ 16,500 2,000 56,300 103,950 85,000 $263,750 $205,000 (123,500) (11,700) (43,000) $ 26,800 $ 63,500 21,350 18,000 160,350 (45,750) $217,450 $ 19,000 2,700 71,000 65,900 58,850 $217,450