Newtech Brake Inc. began operations on January 1, 2013. Its post-closing trial balance at December 31, 2013 and 2014 is shown below along with some other information.
Other information regarding Newtech Brake Inc. and its activities during 2014: 1. Assume all accounts have normal balances. 2. Cash dividends were declared and paid during the year. 3. Plant assets worth $70,000 were purchased during the year by paying cash of $20,000 and issuing a long-term note payable for the balance. 4. Plant assets were sold during the year.
Required Using the information provided, prepare a statement of cash flows (applying the indirect method) for the year ended December 31, 2014. Analysis Component: Newtech Brake Inc.’s income statement showed a net loss of $7,600 for the year ended December 31, 2014, yet the statement of cash flows shows net cash inflows from operating activities of $4,000 for the same period. Explain what this differencemeans.