The following statement was prepared by Maloney Corporation’s accountant.

The following additional information relating to Maloney Corporation is available for the year ended September 30, 2022.

1. Salaries and wages expense attributable to share-option plans was $25,000 for the year.

2.

Expenditures for property, plant, and equipment ............................................ $250,000
Proceeds from retirements of property, plant, and equipment ......................... 36,000
Net expenditures ................................................................................................... $214,000

3. A share dividend of 10,000 Maloney Corporation ordinary shares was distributed to ordinary shareholders on April 1, 2022, when the per share market price was $7 and par value was $1.

4. On July 1, 2022, when its market price was $6 per share, 16,000 of Maloney Corporation ordinary shares were issued in exchange for 4,000 preference shares.

5.

Depreciation expense ................. $ 65,000
Depletion expense ............................ 5,000
........................................................  $ 70,000

6.

Increase in long-term debt .................... $620,000
Retirement of debt .................................... 441,000
Net increase .............................................. $179,000

Instructions

a. In general, what are the objectives of a statement of the type shown above for Maloney Corporation? Explain.

b. Identify the weaknesses in the form and format of Maloney Corporation’s statement of cash flows without reference to the additional information. (Assume adoption of the indirect method.)

c. For each of the six items of additional information for the statement of cash flows, indicate the preferable treatment and explain why the suggested treatment is preferable.

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Maloney Corporation Statement of Sources and Uses of Cash For the Year Ended September 30, 2022 Sources of cash Net income $111,000 Depreciation and depletion 70,000 Increase in long-term debt 179,000 Changes in current receivables and inventories, less current liabilities (excluding current maturities of long-term debt) 14,000 $374,000 Application of cash Cash dividends $ 60,000 Expenditure for property, plant, and equipment 214,000 Investments and other uses 20,000 Change in cash 80,000 $374,000