MetroVideo Inc. is developing its annual financial statements at December 31, 2011. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

Additional Data:
a. Bought equipment for cash, $59,250.
b. Paid $11,500 on the long-term note payable.
c. Issued new shares of stock for $32,600 cash.
d. Dividends of $14,650 were declared and paid.
e. Other expenses all relate to wages.
f. Accounts payable includes only inventory purchases made on credit.

Required:
1. Prepare the statement of cash flows using the indirect method for the year ended December 31, 2011.
2. Based on the cash flow statement, write a short paragraph explaining the major sources and uses of cash by MetroVideo during2011.

2011 2010 Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation 15,250 22,250 209,250 (59,000) $256,000 68,250 65,500 22,250 18,000 150,000 (45,750) $210,000 Accounts payable Wages payable Note payable, long-term Contributed capital Retained earnings 4.000 59,500 98,500 85.000 $256.000 $9,000 19,000 1,200 71,000 65,900 52,900 $210,000 Income statement for 2011 Sales Cost of goods sold Depreciation expense Other expenses $195,000 92,000 13,250 43,000 S 46.750 Net income