The income statement and comparative balance sheet for Front Row Entertainment is shown below:

Required:
1. Prepare a statement of cash flows using the indirect method.
2. What conclusions can you draw about Front Row Entertainment from the observed pattern of cash flows?

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Front Row Entertainment Inc. Front Row Entertainment Inc. Income Statement For the Year Ended December 31, 2012 nce December 31, 2012 and 2011 $3,142,800 636,000 $3,778,800 Sales revenue $30,322 98,250 9,005 Expenses: $2,134,260 952,663 Artist fee expense Cost of goods sold Salaries and wages expense Depreciation expense Interest expense 345,100 51,675 98,087 Total current assets 325,552 $89,755 Property, plant, and equipment: 1,857,250 $3.705,135 $73,665 Total expenses Trademark 25,000 $2,181,317 $94,595 Additional Information: LUABILITIES AND EQUITY 1. Bonds payable of $1,500,000 were issued for $1,378,300 on July 1, 2012. Dring 2012, $12,170 of the discount on 3,90 2. In January 2012, a $380,000 long-term note payable was Current liabilities: $12,240 the bonds payable was amortized Salaries payable issued in exchange for a building. No buildings were sold dur- 2,180 3 On February 29, an $8,000 short-term note payable was issued in exchange for equipment. No equipment was sold s of $25,000 were declared and paid during Nołes payable Ishort-term Total current liabilities $410 durik the end 56,197 were Long-term liabilities: 405,000 1,500,000 25,000 5. 6. 7. Common stock was issued for $40,000 cash during 2012 Preferred stock was issued for $225,000 cash during 2012 Treasury stock was purchased for $11,200 during 2012. Front Row reissued $4,800 of treasury stock n December 2012 for $6,600 Less: Discount on bond payable Tolal long term liabili0 $25,00 F 150,000 Preferred stock Common stock Paidin capital in excess of par: 16,000 Prefermed stock Common stock 3 4,585 $20,585 $94,595 Tolal liabilities and equity