SDPS Inc. provides airport transportation services in southern California. An income statement for 2019 and balance sheets for 2019 and 2018 appear below.

SDPS Inc.

Balance Sheets

December 31, 2019 and 2018

Additional Information:
1. 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.
2. A $25,000 principal payment on the long-term note was made during 2019.
3. No dividends were paid during 2019.

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 how SDPS financed its increase in net property, plant, and equipment during a period in which it had a substantial net loss?

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2019 2018 ASSETS Current assets: Cash $ 40,000 126,000 $ 82,000 109,000 25,000 $216,000 Accounts receivable Supplies, fuel Total current assets 11,000 $177,000 Property, plant, and equipment: Equipment, vehicles Accumulated depreciation Net property, plant, and equipment $ 524,000 $ 409,000 (174,000) (136,000) 350,000 $527,000 273,000 $489,000 Total assets LIABILITIES AND EQUITY Current liabilities: $ 58,000 29,000 $103,000 22,000 Accounts payable Wages payable Repair and maintenance payable Rent payable 34,000 51,000 41,000 92,000 $258,000 $172,000 Total current liabilities Long-term liabilities: Notes payable Total liabilities 100,000 $358,000 125,000 $297,000 Equity: Common stock Retained earnings Total equity Total liabilities and equity $150,000 19,000 $150,000 42,000 192,000 $489,000 169,000 $527,000 Sales $937,000 Less operating expenses: Wages expense Rent expense Supplies expense Maintenance $278,000 229,000 83,000 138,000 expense Depreciation 215,000 943,000 expense Income (loss) from operations Other income (expenses): Loss on disposal of property, plant, and equipment Interest expense $ (6,000) $ (3,000) (14,000) (17,000) Net loss $ (23,000)