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, 2012.

  1. Wage and salary expense attributable to stock 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 stock dividend of 10,000 shares of Maloney Corporation common stock was distributed to common stockholders on April 1, 2012, when the per share market price was $7 and par value was $1.
  4. On July 1, 2012, when its market price was $6 per share, 16,000 shares of Maloney Corporation common stock were issued in exchange for 4,000 shares of preferred stock.

  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.