The City of Cypress has prepared the following statement of cash flows for its sole proprietary fund.

 

Required

The statement as presented is not in accordance with GASB standards. Identify the errors and explain how the errors should be corrected in order to conform with GASB standards.

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The City of Cypress Statement of Cash Flows Proprietary Fund For the Year Ended December 31 Cash flows from operating activities: Net Income Adjustments for: Depreciation and amortization Provision for losses on accounts receivable Gain on sale of equipment Increase in receivables Decrease in inventories Decrease in vouchers payable Operating grants paid to other governments Cash provided from operations Cash flows from investing activities: Purchase of property, plant, and equipment Proceeds from sale of equipment Deposit into an investment poul Cash provided from investing activities Cash flows from financing activities: Payments in lieu of taxes Proceeds from issuance of long-term debt for capital projects Interest payments for long-term debt for capital projects Proceeds from issuance of debt for (noncapital) Net cash provided from financing activities Net increase in cash and cash equivalents Cash and cash equivalents-January 1 Cash and cash equivalents-December 31 $12.500 2,000 (6.500) (17,500) 32,500 (5,000) (7.500) (40,000) 3,500 (10,000) 10.500 15,000 (2,500) 5,000 $300,000 8,000 2,500 310,500 (46,500) 28,000 292,000 208,000 $500,000